ICICI Bank named joint managing director Chanda Kochhar as its new chief executive to lead the country`s second-largest bank as it battles declining market share, souring bad debts and a tough global environment.
Kochhar, 47, who joined ICICI as a management trainee in 1984, had been widely expected to succeed K.V. Kamath, who steps down next April after 13 years during which he spearheaded the bank`s foray into insurance and asset management.
Shares in India`s top private-sector lender, valued at $11 billion, have tumbled about 60 percent this year, hit by exposure overseas at a time of turmoil in global markets.
Kochhar takes over the CEO`s job for five years from May, cementing her position as one of India`s most powerful businesswomen. Kamath takes over as ICICI`s non-executive chairman.
Kochhar faces an immediate task to arrest the bank`s shrinking market share and restore confidence among its depositors and investors.
"ICICI is going through a change by shedding business with high risk and sacrificing growth," said Vaibhav Agarwal, a banking analyst at Angel Broking.
"The strategy is in place to clean the book within 18 months, she has to aggressively implement it."
Mumbai-based ICICI has the largest exposure among Indian banks to the global financial crisis and its shares have fallen 28 percent since mid-September when Lehman Brothers collapsed.
As the Lehman shock reverberated around global markets, both Kamath and Kochhar repeatedly assured investors and depositors that New York-listed ICICI was safe and well capitalised, and its stock has recovered 68 percent from its October low.
Analysts said ICICI needs to pare its overseas exposure, which makes up about 4 percent of its total balance sheet.
WIDELY RESPECTED
ICICI`s senior officials and Kochhar`s former colleagues say she has the capacity to take on tough tasks and lift employee morale as she is respected internally.
"She is one of the few persons who have exposure in all areas of the bank," said former colleague and chief executive at Edelweiss Capital Ltd Rashesh Shah.
Kochhar joined the bank`s board in 2001 and has led key businesses including corporate banking, project and infrastructure financing.
At the turn of the decade, she moved the bank into retail lending at a time the economy was taking off and creating demand for everything from homes to cars to household durables.
Retail loans eventually became the bank`s largest portfolio reaching a staggering 67 percent of outstanding advances at one point and ICICI turned into a household name in India.
But a part of these loans have soured in the economic slowdown pushing up the bank`s overall bad debts to 1.9 percent of net advances in September from 1.4 percent a year ago.
"The challenge for her would be the overall economic slowdown and building the deposit base at a time when all banks are aggressively competing for deposits," said Edelweiss` Shah.
ICICI`s share of deposits and loans in the Indian banking system had fallen to 6.5 percent by September this year from 8.7 percent in March 2007, with a large part of the fall in 2008, according to data from three brokerages polled by Reuters.
By 0830 GMT, the bank`s shares were flat in a steady broader market.
Source:
http://in.news.yahoo.com/137/20081219/744/tbs-icici-bank-names-chanda-kochhar-ce
