Rana Kapoor proposes peace to retain control over YES Bank's operation

YES Bank Founder and Chief Executive Officer (CEO) Rana Kapoor (pictured) proposed burying the hatchet with co-promoter Madhu Kapur in an attempt to retain control over the bank’s operation.

Kapoor met with Kapur and her daughter Shagun Gogia last week to propose that the two promoters pose a united front. The proposal also included an option for them to merge shareholding power and voting rights, said sources.

Kapoor’s three-year reappointment was cut short by an order issued by the Reserve Bank of India (RBI) recently. He will be in office till January 31, 2019.

“Kapoor has enjoyed full access and knowledge of the functioning of the bank due to his role as CEO, which will go away once his tenure ends,” said a source in the know. He said the proposal was a Kapoor's attempt at ensuring that he has better access to the bank’s operations.

A YES Bank spokesperson said Kapoor had acted in his role as promoter and not as the bank’s MD and CEO.

The bank’s articles of association state that any nomination of directors needs consensus of both promoters. The source said the two parties had never made a joint nomination till date. While the bank board can nominate a CEO without the approval of the two promoters, the source said a joint nomination by the two would be highly considered by the board.

Business Standard had reported that the bank plans to submit MD & CEO candidates by December 15. The source had added that an external candidate was highly likely and that Rajat Monga was the only internal candidate being considered. Monga is senior group president at YES Bank. 

Kapoor's peace proposal included a promise to maintain information symmetry of the bank's functioning. Monga had earlier approached the Kapur camp to start peace talks on behalf of Kapoor, said another source.

It added that the meeting between the two was amicable, a stark contrast to the meetings of earlier years that always ended with the rivals at loggerheads. While there is no timeline set for Kapur to accept the proposal, both parties would like the matter to resolve at the earliest, he added.

Rana Kapoor and his family together owned 10.64 per cent of the bank's equity, as of last month, while Madhu Kapur owns 9.27 per cent, according to a BSE filing. 

Shares of the bank have been under pressure ever since the RBI trimmed Kapoor's term as the CEO in September. In the past month, the stock has fallen 37 per cent as of September 17.

The bank’s stock tanked nearly 8 per cent intra-day on Friday in response to RBI denying its request for extending Kapoor’s term.  The RBI had reaffirmed that Kapoor’s successor needs to be finalised before February. The stock closed at Rs 217.7 on BSE, down by 6.06 per cent from previous close.