Idbi Spat Sees Bank Brass Exiting

The fight between the Industrial Development Bank of India (IDBI) and subsidiary IDBI Bank is taking its toll on the senior management of the bank. Some executives have already put in their papers, while others are expected to follow suit.

According to sources, in the last few months the head of marketing, Karthi Kumar Marshan, head of retail liability and third-party distribution, Sandeep Mookerjee, and head of risk management, Prakash Jaodekar, have left the bank.

Mookerjee joined the Development Credit Bank as head of its personal financial services and Jaodekar joined Oman International Bank. Sources added that at least two other senior executives have put in their papers, while a few others were contemplating to move out.

Sources said that there has been a general feeling of unrest and employees are not happy with the current development regarding IDBI not taking any decision on the bank's capital raising plan.

"When the new management had come in, there was a feeling of optimism in the bank. Many officials from foreign and other private banks had come into the bank. However, in the current scenario there is no clarity on whether there will be any stake sale to a foreign bank or whether it will be taken over by the parent," said a senior bank official.

Chrysalis Capital, Ankaar Capital and New Bridge Capital were in talks for picking up a 26 per cent stake in IDBI Bank. IDBI's stake in the bank is pegged at around 57.14 per cent and another 14 per cent is held by the Small Industries Development Bank of India (Sidbi). IDBI now is believed to be keen on selling a maximum of 13 per cent in the bank to Sidbi at around Rs 26 a share, as per the Sebi pricing formula.

In case the bank is in additional need of funds IDBI is looking at parking an additional 13 per cent with the Life Insurance Corporation.

In the event of a merger with IDBI Bank, IDBI could buy back this stake from SIDBI at the market price or will offer a 12 to 15 per cent rate of return. In the case IDBI decides to offload its stake then, Sidbi could offload its stake to a strategic investor.