Federal Bank tanks 6% after Kotak Bank retains candidate it was eyeing for top job

Shares of Federal Bank fell over 6 percent to hit an intraday low of Rs 149.15 on the NSE in early deals on February 20.

The slump in trade follows larger private sector lender Kotak Mahindra Bank has re-designating KVS Manian as the joint managing director. Manian was reportedly being considered by Federal Bank to succeed Shyam Srinivasan as the managing director and chief executive officer.

On February 15, CNBC-TV18 had reported citing unidentified sources that Federal Bank has shortlisted two internal candidates along with Kotak Mahindra Bank’s Manian for the corner office.

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The bank turned to Manian after the Reserve Bank of India rejected its plea to extend Srinivasan’s tenure for one year. Srinivasan, who took charge of the Aluva-based private sector lender in 2010, was eligible for an additional year.

According to RBI guidelines, a CEO can stay with a bank for up to 15 years if they are not a promoter. His current term ends on September 22, 2024.

Last month, Federal Bank reported a 25.24 percent on-year rise in net profit at Rs 1,007 crore for the quarter ended December 2023, thanks to a 61 percent jump in other income.

Its net interest income (NII) for the quarter came in at Rs 2,123 crore, up 8.48 percent YoY. The private bank said its fee income for the quarter rose to Rs 642 crore from Rs 543 crore in the same quarter last year.

Separately, in a regulatory filing, Federal Bank also announced the allotment of equity shares on the exercise of stock options pursuant to the Employee Stock Option Scheme. A total of 1.6 lakh shares with a face value of Rs 2 each were allotted on February 19 under the ESOS 2017 Scheme.

Also Read | Minda Corporation shares hit 52-week high after Motilal Oswal, Kotak MF buy stake

Federal Bank stock has risen 21 percent in the last one year. In comparison, benchmark Nifty 50 has risen 23 percent during this period.

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