Mumbai (Reuters) – Indian Industrial Bank shares fell on Wednesday after the bank’s CEO resigned, taking on “ethical responsibility” for recent derivatives accounting lapses, but expect a new management team to be in place soon.
Stocks of the country’s fifth largest private lender fell 3% at the opening ceremony, and then, as of 11 a.m., lost some losses of 2.5%.
Later on Tuesday, Indusind CEO Sumant Kathpalia resigned from his resignation, and his representatives also resigned after the failure of derivative accounting revealed on March 10.
The external review team estimates that the bank will have to deal a $230 million blow to its profits. The report has not been made public yet.
Indusind stock fell nearly 8% due to disclosure errors, according to LSEG data and caused 11 of 36 analysts to cover the stock’s ratings.
The committee under the bank’s board of directors will oversee the day-to-day operations before a new CEO is appointed. Sources familiar with central bank thinking said the commission was a “temporary measure” and the CEO will be named soon.
The source refused to determine that the discussion was confidential. The central bank is also the country’s financial regulator and has not responded to emails seeking comments.
Appointment of CEOs is crucial to reassessment of banks, Macquarie analysts said in a note.
Broker Jefferies said in a note that reliable management changes could benefit banks and investors.
According to LSEG, the stock has a median target price of Rs 855 for 12 months, which means an up about 5% with the current price of Rs 815.
According to LSEG data, the average rating of these 36 analysts is “holding” stocks compared to “buy”.
(Reports by Siddhi Nayak and Ira Dugal; Edits by Rashmi Aich and Savio d’Souza)
