How Ravneet Gill won the race to the top at Yes Bank

When Korn Ferry was given the mandate for selection of new chief executive officer of Yes Bank, the mandate was clear. Given the background of the bank, including an ongoing boardroom battle, divergence in gross bank loans and Rana Kapoor being denied an extension, the new candidate was expected to have experience in dealing with both regulatory and compliance matters with decision-making powers.

On January 24, Yes Bank announced that Deutsche Bank India chief Ravneet Singh Gill will be their new MD and CEO from March 1 onwards. It was a close competition between Gill and Yes Bank’s senior group president Rajat Monga.

The bank said that Gill was the number one priority candidate in the submissions made by them to the Reserve Bank of India (RBI) on January 10.

"It was decided that it would be more appropriate to have a fresh set of eyes to review the functioning of the bank," said a source. Monga has been with the bank since its inception in 2004.

Yes Bank vs Deutsche Bank

In October 2017, Yes Bank reported a divergence in gross bad loans of Rs 6,355 crore for FY17. Divergence refers to the difference between the Reserve Bank of India (RBI)'s inspection report and the bank's own report.

Following this, the Reserve Bank of India (RBI) penalised Yes Bank for ‘violations of various regulations issued by RBI in the assessment of non-performing assets (NPAs). A penalty of Rs 6 crore was imposed on account of asset classification issues and a delay in reporting a security incident across its ATM network in the previous year.

In FY16, Yes Bank had reported just a sixth of the bad loans assessed by the banking regulator. During the year, it had reported gross NPAs worth Rs 748.9 crore as on March 31, 2016, while the RBI had asked the lender to classify gross NPAs worth Rs 4,925.6 crore.

Gill, too, has been no stranger to controversy. In 2015, the Germany-based Deutsche Bank’ co-CEO Anshu Jain stepped down after a Libor manipulation controversy with the bank also being fined USD 2.5 billion.

This was followed by appointment of a new CEO globally for Deutsche Bank. Speculations were rife that the next big step was to reduce retail operations in markets like India. Gill, who was the head of corporate market coverage during that time, did face a lot of questions on this development. Finally, this plan was shelved.

Further, the corporate banking experience of Gill was also a reason for him being considered for the Yes Bank position at a time when its asset quality is being closely watched.

Loyalty matters

Gill who had been associated with Deutsche Bank since 1991 was regarded as a stable candidate for the position. Having worked across various functions till he came the India head in 2012, his track record has been blemish-free.

"His re-appointment as CEO of Deutsche Bank India meant that his credentials were minutely reviewed by the Reserve Bank a few months ago. This also gave us the confidence there would be no roadblocks to his approval," said another official.

Both the external as well the internal panel was of the view that an official who had served at an organisation for atleast one to two decades would be ideal since they would bring more stability to the position. This was coming from the fact that outgoing MD,CEO Rana Kapoor also had been serving in this position for almost 15 years.

"Ravneet has handled global corporate clients at a closer level. So, the idea was to get his international expertise to use to help the bank manage its corporate accounts in a more efficient manner," the official quoted above said.

Internal versus external candidate

The search firm as well as the search panel did face the dilemma of whether an internal candidate or external candidate would be most suitable for the job. Monga was the top contender internally.

"We not only look at the legacy of the banks and its strengths-weaknesses, the management changes among peers in the industry were also closely observed. Gill fit the box in all parameters," a source explained.

From an initial shortlist of about seven candidates consisting of public sector, private sector and foreign bank chiefs, Gill was among the top ones in the list.

Later, a formal communication was sent to the shortlisted candidates to gauge their interest. Post that, the shortlist was narrowed down for the committee to do a detailed inspection of the candidate's track record. Here, Monga and Gill emerged as top contenders. A consensus was that an outsider would be the right fit at this juncture.

At competitor Axis Bank too, Amitabh Chaudhry, who headed HDFC Life Insurance, was appointed as its MD and CEO.

Timeline

June 2018: Yes Bank shareholders approve re-appointment of Rana Kapoor as MD, CEO for three years. Await RBI approval. Kapoor tenure was to end on August 31, 2018.

August 30, 2018: Yes Bank says they have received regulatory approval for Rana Kapoor to continue as their MD & CEO till further notice from RBI.

September 15, 2018: Reserve Bank of India (RBI) cuts short Yes Bank MD & CEO Rana Kapoor tenure to January 31, 2018.

September 25, 2018: Yes Bank board requests more time from RBI to allow Kapoor to remain as MD, CEO until a minimum of April 30, 2019 and thereafter extend to September 30, 2019.

October 5, 2018: Yes Bank appoints former SBI chairman OP Bhatt and former insurance regulatory body head TS Vijayan as external members in the search and selection committee for the search panel. Bhatt steps down in November 2018.

October 11, 2018: Yes Bank announces the appointment of global firm Korn Ferry mandated by the 'Search & Selection Committee' to assist in evaluating both internal and external candidates for MD,CEO post.

October 17, 2018: RBI turns down request to extend Kapoor’s term. Asks Yes Bank to appoint a successor to Rana Kapoor by February 1, 2019.

December 13, 2018: Yes Bank board shortlists candidates for MD, CEO post. The list consisted of internal and external candidates.

January 9, 2019: Yes Bank finalises the list of candidates for MD, CEO post, sends it to RBI for approval a day later.

January 23, 2019: RBI gives the go-ahead for the appointment of Ravneet Gill as MD and CEO of Yes Bank.