Axis Bank starts hunt for new chief executive

Axis Bank, India’s third-largest private sector bank, has appointed headhunters to start the search for a new chief executive officer (CEO) to succeed Shikha Sharma, who is set to step down next year, people familiar with the matter said.

Executive search firm Egon Zehnder has been selected by the Axis Bank board to identify a new CEO, one of the people said, asking not to be identified as the information is private. On the bank’s side, the process is being led by Prasad Menon, an independent director who is also chairman of the Axis Bank nomination committee, the people said.

“There is a laid down process which the board undertakes at regular intervals but to conclude that there is going to be change of leadership is entirely premature and speculative,” an Axis Bank spokeswoman said. A representative for Egon Zehnder didn’t immediately respond to requests for comment.

The Mumbai-based bank had been battling a surge in soured debt that led to a slump in profit for five straight quarters through March 31, exchange filings show. In April, Chief Financial Officer Jairam Sridharan expressed confidence that the worst of the bank’s bad-loan issues are over. One way Sharma has attempted to address the problem has been to boost the proportion of consumer loans versus corporate debt. She increased consumer loans to 45 percent of the total, compared with 21 percent when she became CEO in 2009, filings show. Shares of the bank more than tripled in the eight years under Sharma, in line with the Bankex index. They outperformed State Bank of India, the country’s largest lender, which rose 56 percent during the period, and ICICI Bank, which added 126 per cent.

Book value per share, a key measure of profitability, rose steadily over the past five years ended March 31 to touch 233 rupees. Axis is seeking to choose the new CEO by December, according to the people. They said it’s still possible that Sharma, who was named to head the bank in April 2009, might get an extension to her term, which ends next June.