Finance

Kotak Mahindra Bank: Long-term succession planning: Jay Kotak is being readied for top role at Kotak Mahindra Bank

Harvard alumnus and Uday Kotak‘s elder son Jay Kotak has lately had significant enhancements to his executive role at the Kotak Mahindra Bankprompting analysts to view the assignments as a start to long-term succession planning at the financial empire bearing the family name of Asia’s richest banker,

To be sure, the central bank has put a 15-year tenure cap on chief executive roles at lenders, and Uday Kotak has already led the private bank he founded for more than 18 years.

His latest three-year term as the bank’s head is due to end in December 2023. Analysts believe Uday Kotak’s immediate successor could be KVS Manianan executive director and a veteran at the bank.

The presence of Jay Kotak at an investor meet in November to highlight the bank’s progress and plans for digital banking product 811 has led analysts to believe that Uday Kotak may be grooming his son under Manian’s stewardship. Jefferies analysts Prakhar Sharma, Abhishek Khanna and Bhaskar Basu highlighted Jay Kotak’s active presence in the investor meet while highlighting the top-deck reshuffle.

“The bank recently announced a few changes at the top management level. Shanti Ekambaram, who has been leading the retail business, was elevated to an ED,” Jefferies said in a note. “Notably, the event was also led by Jay Kotak (Uday Kotak’s son and co-head of 811) alongside Uday Kotak, Shanti Ekambaram, and Manish Agarwal. As highlighted earlier, we believe that the probability of KVS Manian (ED & Head of Corporate Bank) to be elevated for the role of CEO has risen.”

Based on ‘Merit’

Replying to ET’s mailed query on Jay Kotak’s present and future roles in the bank and their potential impact on succession planning, a

Bank spokesperson Jay Kotak is now in charge of 811’s strategy and product as its co-head, and that “merit” will determine his career progression at the lender.

‘Responsible for Strategy & Product’

“After completing his MBA from Harvard, Jay Kotak joined Kotak Investment Bank (Kotak Mahindra Capital Company) in 2017. In 2019, Jay joined Kotak Mahindra Bank in consumer banking business as executive assistant to Shanti Ekambaram, group president of consumer bank,” said the spokesperson.

“Thereafter, in January 2021, Jay joined the Kotak 811 team. Manish Agarwal is the business head of Kotak 811 and is responsible for the business. Jay was appointed co-head of Kotak 811 from January 2022 and is responsible for the strategy and the product. Both Manish and Jay drive the Kotak 811 business under Shanti’s oversight. Jay’s progress in the bank as a professional is and will continue to be on merit,” the spokesperson said.

Separately, analysts’ assessment of Manian as an immediate successor to Uday Kotak was described by the spokesperson as ‘speculative’.

Jay Kotak has been working at the bank founded by his father for almost five years. He has an MBA from Harvard and a BA in History from Columbia University. Jay has previously worked with McKinsey & Co and Goldman Sachs,

The investor event’s video clip, posted by the bank on its website, showed Jay making a two-part presentation highlighting the bank” five-year journey since launching the digital savings initiative – 811 – after demonetisation and explaining how the bank has now ensured better customer engagement and cross-selling using the product.

Tenure Cap

Jay Kotak’s elevation as the co-head of a growing business stream comes even as Uday Kotak’s tenure as CEO is on its last lap after the Reserve Bank of India (RBI) capped the tenure of incumbent bank CEOs at 15 years in April 2021. RBI The order came just days after the central bank had approved a three-year tenure for Kotak starting January 2021. Hence, analysts believe that Kotak, who has already been at the helm for 18 years, is unlikely to get another term as the bank’s executive head .

Jay Kotak started his 811 presentation quoting his Harvard professor Clay Christensen and ended it by quoting his favorite basketball player Michael Jordan. He highlighted the product’s depth with 12.3 million full KYC savings account customers and 5.3 million users paying for debit cards. Nearly a third of the bank’s personal loans and consumer finance by value are now garnered through this product.

Break-even Point

The bank’s calculations showed it took 4.5 years for the bank to break even after acquiring a customer through 811 at the end of March 2022, down from 9.4 years at the end of FY19. In a note,

said the bank is well positioned to sustain its healthy growth in customer acquisition and cross-selling. “The bank continues to demonstrate steady progress in building a strong liability franchise, with CASA ratio ~61% (the highest in the industry),” Motilal Oswal said. “This favorably positions Kotak in a rising rate environment.”

Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button