The Fire Fighter
"Is Rana Kapoor still part of the bank?," an analyst asked Ravneet Singh Gill, the MD & CEO, who succeeded Kapoor at the troubled Yes Bank five months ago. The query, during a call with investors last month, was triggered by reports that the founder professional, who had to exit the bank due to asset quality deterioration, might come back as a director. Though the report was denied by Kapoor himself, the 56 year old Gill said: "He (Kapoor) has no involvement, executive or non executive, direct or indirect." The bank has, in fact, clawed back Kapoor's bonuses for 2014/15 and 2015/16.
Kapoor may be out but his business calls continue to worry the bank. In the last one year, exposure to big troubled companies such as IL&FS, DHFL, Indiabulls, Jet Airways, Anil Ambani's Reliance Group, Essel Group and Cox & Kings has been creating huge asset quality and capital pressures for the mid sized bank. Its gross non performing assets (NPAs) rose from 0.76 per cent in March 2016 to 3.22 per cent in March 2019, while return on assets fell from 1.70 per cent to 0.5 per cent. Profits slipped to Rs 1,720 crore in 2018/19 from Rs 4,224 crore in the previous year. To top it all, the risky portfolio continues to be fairly large, creating potential for further slippages, while capital levels are barely adequate to meet the regulatory norms.
The question analysts are asking is are there more skeletons in the bank's cupboard (mainly risky/dud loans) that Gill will have to deal with on priority so that the bank does not go down under? And, more importantly, can he keep the bank growing while steadying the ship and keeping it safe in view of the slowdown challenges?
The Legacy
Gill, who joined from Deutsche Bank in India, is struggling with several legacy issues. Right now, he is studying the bank's working and hiring people, while doing firefighting as the operating environment throws up new challenges every day.
