ReportWire

Tag: Uday Kotak

  • Uday Kotak reflects on time as head of bank in latest annual report

    Uday Kotak reflects on time as head of bank in latest annual report

    [ad_1]

    An investor who invested ₹10,000 with Kotak Mahindra Group in 1985 would be worth about ₹300 crore today, according to Uday MD & CEO, Kotak, Kotak Mahindra Bank (KMB).

    “As I step down from my whole-time role soon, I would like to reflect on what that role means. I am a manager, a board governance member and a strategic shareholder defined in Indian terminology as a promoter.

    “Yes, I have spent most of my life here, starting from scratch with very little capital in 1985, 3 people and a 300 sq. foot office,” reminisced Kotak in the private sector lender’s latest annual report.

    He emphasised that the group is at the right place at the right time.

    “We are a quintessential product of the India growth story and the financial sector evolution. We are a quintessential product of the India growth story and the financial sector evolution.

    “We have created value for stakeholders and now provide about 1 lakh direct jobs and a multiple of that in indirect jobs,” the KMB chief said.

    Going forward

    Going forward, Kotak sees his role as a non-executive board governance member and a strategic shareholder with a long term perspective of nurturing a world class institution.

    ALSO READ | Credit Suisse inquiry will keep files secret for 50 years, reports Swiss paper

    “It is unusual in today’s world of banking anywhere to have an individual with about 26 per cent skin in the game with disproportionate family assets in one stock, emotionally attached to living his dream of making India proud.

    “I am confident that the alignment and commitment of the shareholders, board and the management will navigate us through the changing times. And of course, dealing with the ever-evolving regulatory and policy landscape,” he said.

    Avoid accident-free roads mindset

    Kotak observed that the turbulent period post 2008 saw the Indian financial sector experiencing many crises till about 2020. That has created a certain backdrop.

    “We must avoid a mindset that we want accident-free roads hence we will restrict cars. Instead, to take this analogy further, we need more roads, more cars and better signals and traffic regulation.

    “Accidents have to be minimised and managed, and cannot be eliminated without having a significant impact on growth aspirations. The policy and regulatory framework needs to be aligned with this,” he said.

    Prevent bureaucratisation of financial services

    Kotak underscored that entrepreneurship must be allowed thrive and he was fortunate to see this in most of his career.

    “There is a need to build regulatory trust which requires action on both sides of the aisle. I feel the financial sector players risk becoming more robotic, curbing the entrepreneurial flair since the fear of making a mistake overrides the joy of creation and development.

    “While we need ‘Arjuna’s eye’ on risk management, we must prevent bureaucratisation of financial services,” he said..

    KMB, together with its subsidiaries, is a diversified financial services group providing a wide range of banking and financial services including Consumer Banking, Commercial Banking, Treasury and Corporate Banking, Investment Banking, Stock Broking, Vehicle Finance, Advisory Services, Asset Management, Life Insurance and General Insurance..

    [ad_2]

    Source link

  • Kotak vs Watsa: The battle for acquiring IDBI Bank intensifies

    Kotak vs Watsa: The battle for acquiring IDBI Bank intensifies

    [ad_1]

    It’s a two-horse race for IDBI Bank between Kotak Mahindra Bank and Prem Watsa-led Fairfax India Holdings, with both parties willing to pay a premium for acquiring a controlling stake. However, neither wants to merge IDBI Bank with their respective banks at this juncture.

    “A reasonable share of the government holding may remain in IDBI Bank for at least 2-3 years post the sale,” said a source explaining why the two bidders want to retain their existing banking entities independent of IDBI Bank.

    That said, highly placed sources say both interested investors are willing to shell out the premium expected by the government to acquire a majority stake in the bank.

    At around ₹57,000 crore of market capitalisation, IDBI Bank trades at approximately 1.3x 12-months trailing price to book valuation.

    On June 5, 2022 businessline had reported on Prem Watsa evincing interest in IDBI Bank, while on February 5 this year, we reported about Kotak’s interest in the bank. Sumitomo Mitsui Financial Group and Emirates NBD are said to be the other bidders.

    Seeking exemptions

    Kotak has proposed a structure whereby IDBI Bank would be held as its associate, with none of Kotak’s key management executives playing any role in the former.

    “The boards of IDBI Bank and Kotak Bank will not have overlaps,” said a person familiar with the matter. Once the government’s stake in IDBI Bank reduces, it may be merged with Kotak Bank. “A glide path of 3-5 years has been sought for the merger,” said the source.

    Fairfax has approached the RBI to not consider it as a promoter of IDBI Bank. “Fairfax wants to be seen as a large investor in the bank because it doesn’t want to cede control in CSB Bank or merge the two banks in the near term,” said another senior executive who didn’t want to be identified.

    As a deal sweetener, sources said: “Fairfax may extend comfort to the Government of India and Life Insurance Corporation of India (LIC) that IDBI Bank will remain a bancassurance partner for all the existing lines of businesses it has with these entities.”

    Emails sent to Kotak Mahindra Bank and Fairfax remained unanswered till press time.

    Tough call

    The exemptions sought by Kotak and Fairfax are contrary to the current regulations. The extant ownership norms do not permit an investor to hold two banks in the capacity of a promoter.

    Fairfax is the promoter of CSB Bank holding a 49.72 per cent stake. Likewise, a bank cannot invest in another bank, though an exception was made in March 2020 when the State Bank of India invested a 49 per cent stake in YES Bank.

    Tracking the divestment
    • DIPAM opened an expression of interest in IDBI Bank on October 7, 2022.
    • On January 7, 2023, it announced that it received multiple interest.
    • Presently, LIC and government hold 49.24 per cent and 45.48 per cent stake in the bank.
    • Post the sale LIC to hold 19.24 per cent and government at 15.48 per cent.
    • Data room for due diligence likely to be opened in June.
    • DIPAM may call for financial bids by September.

    [ad_2]

    Source link