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In a bid to boost investor sentiment, private sector lender RBL Bank has said that speculation linking the appointment of its new MD and CEO, R Subramaniakumar, with its asset quality challenges is baseless.
“There has been considerable speculation and rumours linking the appointment of the new MD and CEO of the bank, RS Kumar, with asset quality challenges for the bank in the near future. We wish to reiterate that such speculation is baseless and unfounded and purely speculative in nature,” it said in a statement on Tuesday.
It also asserted that the bank is well provided and does not foresee any asset quality challenges.
For the year ended March 31, 2022, the gross and net NPA were 4.4 per cent and 1.3 per cent, with a provision coverage ratio of 70.4 per cent, with no reportable divergence.
“The bank remains well capitalised and, post its recent Tier-2 capital raise on May 13, 2022, from the United States International Development Finance Corporation, America’s development finance institution, the capital adequacy ratio has increased to approximately 17.8 per cent,” it said.
The Reserve Bank of India on June 10 approved the appointment of Subramaniakumar as Managing Director and CEO of RBL Bank for three years. effective from his taking charge.
The bank’s shares have, however, been under pressure following the appointment and fell over 22 per cent on Monday. It closed 0.51 per cent lower at ₹87.45 apiece on Tuesday on the BSE.
Analysts had expressed surprise over Subramaniakumar’s appointment, noting his experience as a troubleshooter.
“Given his profile, he comes across as a troubleshooter with decent success at Indian Oversees Bank and DHFL. However, his selection as MD and CEO of a private bank, despite the interim management’s assurance on asset quality and plans to reorient the bank on the path of growth, is a little surprising. We believe that his selection by RBL and relatively swift approval by the RBI indicates the central bank’s blessing throughout the process, to bring stability and credibility to the bank,” Emkay Global Financial Services said in a note.
The brokerage had said it believes the new MD’s priority would be to improve portfolio quality, strengthen compliance and the risk management architecture, and stabilise the bank. “That said, we believe there could be potential risk of some asset-quality clean-up (if required) and mid-level management attrition as well,” it had said.
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