Bandhan Bank Shares Dip 9% as CEO Resigns; Jefferies Downgrades
Bandhan Bank, a significant player in India’s banking sector, witnessed a sharp decline of 9% in its share price during early trading on Monday, following the unexpected resignation of its Managing Director & CEO, Chandra Shekhar Ghosh. Ghosh, who has been steering the bank since July 10, 2015, communicated his decision to retire from his current position effective July 9, 2024. This announcement rattled investors and triggered concerns about the bank’s future trajectory.
The sudden departure of Ghosh prompted foreign brokerage firm Jefferies to take action, downgrading Bandhan Bank’s rating from ‘Buy’ to ‘Underperform.’ In addition, Jefferies significantly reduced its target price for the bank’s shares from ₹290 to ₹170. The brokerage cited worries regarding the transition in leadership and potential adverse effects on the bank’s growth prospects and credit quality. Ghosh’s exit raised uncertainties about the bank’s strategic direction and its ability to sustain its performance without his leadership.
Nomura, another prominent brokerage, echoed similar sentiments. It downgraded Bandhan Bank’s rating from ‘Buy’ to ‘Reduce’ and slashed the target price from ₹275 to ₹175. Nomura emphasized the importance of closely monitoring the consequences of Ghosh’s departure on various aspects of the bank’s operations, including liabilities, asset quality, and growth prospects. The sudden change in leadership introduces an element of uncertainty, which could affect investor confidence and the bank’s overall performance.
Emkay Global Financial Services also weighed in on the situation, expressing concerns about potential business and management uncertainties arising from Ghosh’s departure.
The firm highlighted the importance of appointing a credible successor to ensure continuity and maintain the bank’s recovery trajectory. The abrupt nature of Ghosh’s resignation has raised questions about succession planning and the bank’s ability to navigate through this transition period smoothly.
These developments have added to existing concerns among investors, exacerbated by a series of senior management exits at Bandhan Bank over the past two years. The market is closely monitoring any further announcements from the Reserve Bank of India (RBI), particularly regarding the appointment of a new CEO and potential implications for the bank’s governance structure. There are also speculations about the RBI’s involvement in the bank’s board, similar to previous instances involving other banks.
Bandhan Bank’s share price plummeted following the unexpected resignation of its CEO, Chandra Shekhar Ghosh. The move triggered downgrades from major brokerages, citing concerns about leadership transition and its impact on the bank’s growth prospects and overall performance. The market awaits further developments and clarity on the bank’s future direction under new leadership.
