Leadership Development and Succession Planning at ICICI Bank

ASIAN CASE RESEARCH JOURNAL, VOL. 15, ISSUE 2, 253–277 (2011)

© 2011 by World Scientific Publishing Co. DOI: 10.1142/S0218927511001551

Leadership Development and Succession Planning at ICICI Bank

“To build a successful business, you have to be able to pick entrepreneurs very early and get them embedded into the business. They need to go out into the ecosystem, demonstrate their abilities, nurture the business and build it up.”

K. V. Kamath, Former MD and CEO, ICICI Bank1

In December 2008, the 16-member board of ICICI bank put their seal on the appointment of its joint managing director, Chanda Kochhar (47) as its new MD and CEO from May 1, 2009 to March 31, 2014 to lead India’s second-largest lender at a time of declining market share, soaring bad debts and a tough global environment2,3. She has also been appointed as non-executive chairperson of ICICI Prudential Life Insurance, ICICI Lombard General Insurance, ICICI Prudential Asset Management, ICICI Securities, ICICI Bank UK, and ICICI Bank Canada4. She would be the successor of the 61-year old visionary banker K. V. Kamath, MD and CEO of ICICI Bank who was to retire on 30 April, 2009 after completing his successful tenure of 11 years. ICICI bank board appointed Kamath as non-executive chairman with effect from May 1, 2009 in place of the existing non-executive Chairman N. Vaghul who would be retiring on April 30, 20093,4.

ICICI Bank: The Journey from fInanCIaL InSTITuTIon To Bank

ICICI (Industrial Credit and Investment Corporation of India Limited) was formed on January 5, 1955 at the

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This case was prepared by Associate Professor Lakhwinder Singh Kang of Guru Nanak Dev Uni-versity, India, as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative or business situation.

Please address all correspon-dence to Associate Professor Lakhwinder Singh Kang, Department of Commerce and Business Management, Guru Nanak Dev University, Amritsar, Punjab, India. E-mail: [email protected]

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initiative of the World Bank, the Government of India and the representatives of the Indian industry. The principal objective was to create a financial institution for providing medium and long term project finance to Indian businesses. ICICI was a creation of the Indian corporate sector, with the basic charter to service and facilitate the growth of the Indian corporate sector. A. Ramaswami Mudaliar was elected as the first Chairman and managing director of ICICI Ltd5. A lawyer, politician and statesman Mudaliar worked as a senior leader of the Justice Party. He also served on various administrative and bureaucratic positions in pre-independence and independent India such as, Diwan of Mysore, President of the United Nations Economic and Social Council, Member of Imperial War Cabinet and Viceroy’s Executive Council6. In 1958, Gaganvihari Lallabhai Mehta was appointed as second chairman of ICICI Ltd replacing Mudaliar. The able leadership and foresighted vision of Mehta helped ICICI to develop itself as a major financial institution of the country. He contributed to the growth of ICICI by building up its relationship with the Government of India, the Reserve Bank of India and other financial institutions7.

In 1972 ICICI Ltd became the second entity in India to set up merchant banking services and HT Parekh replaced GL Mehta as the third Chairman of ICICI Ltd. In 1977, ICICI set a benchmark by sponsoring the formation of Housing Development Finance Corporation (HDFC) which at present is one of the top private banks in India. HT Parekh left ICICI Ltd to head the operations of HDFC. James Raj was appointed as the chairman of ICICI in 1978 and was replaced by SS Mehta in 1979. In 1982 ICICI became the first ever Indian borrower to raise European Currency Units and it also commenced leasing business. SS Mehta successfully completed his tenure of five years in 1984 and S. Nadkarni was appointed as the sixth Chairman of ICICI Ltd. Nadkarni taught ICICI to look beyond the highly regulated environment and tread into areas such as investment banking and leasing5,8. Before the expiry of the term, Nadkarni was replaced by N. Vaghul in 1985. ICICI transformed its business in 1990s from a development

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LEADERSHIP DEVELOPMENT AND SUCCESSION PLANNING AT ICICI BANK 255

financial institution which was offering only project finance to a diversified financial services group to delivering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI bank9.

ICICI established a banking corporation in 1994, as a banking subsidiary formerly known as Industrial Credit and Investment Corporation of India which was renamed as ‘ICICI Bank Limited’. ICICI found a separate legal entity, i.e. ICICI bank to undertake normal banking operations. ICICI Ltd became the first company in 1996 in the Indian financial sector to raise Global Depository Receipts and SCICI merged with ICICI Ltd5,10. During Vaghul’s term as CEO from 1985 to 1996, ICICI was transformed from a small-size and long-term credit bank to a large diversified financial conglom-erate. He was instrumental in starting an investment bank, a commercial bank, a venture capital company and an asset management company as a part of the ICICI group. He was also responsible for the promotion of India’s first credit rating company CRISIL, which emerged as a market leader in the region. In recognition of his pioneering efforts he was selected as the “Businessman of the Year” in 1992, by ‘Business India’, a leading business magazine of India. He was an executive chairman from 1992 to 1996 and non-executive chairman from 1996 to 200911.

K. V. Kamath was appointed as the Managing Director and CEO of ICICI Ltd in 1996. Kamath, a mechanical engineer from Regional Engineering College, Karnataka and a manage-ment graduate from the Indian Institute of Management, Ahmedabad, joined the project finance division of ICICI as management trainee in 1971. A quick learner, Kamath demonstrated his entrepreneurial skills early in his career and his sheer talent caught the attention of the then chairman of ICICI, N. Vaghul. But in 1988, Kamath left ICICI and went to Manila to join the Asian Development Bank. He worked with ADB for eight years before joining ICICI Ltd back in 1996 as the Managing Director and CEO12,13. The Industrial Credit and Investment Corporation of India Ltd, was renamed as ICICI Ltd in 1997 and became the first Indian financial institution to go online and opened the floodgates of a unique success story. Starting with just 5,000 online customers,

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ICICI served over 2.5 million people online by 2007. ICICI announced the takeover of ITC Classic Finance in 1997. The bank introduced electronic funds transfer facility and opened 11 branches and 2 extension counters, thereby, increasing the total network to 33 branches and 4 extension counters. ICICI announced the takeover of Anagram Finance in 1998. Within three years of taking over as the MD and CEO of ICICI, in September 1999, Kamath drew up aggressive plans for growth. In the same year, ICICI Ltd got listed on the New York Stock Exchange (NYSE), the first ever Indian financial institution to go the American Depositary Receipts (ADR) route. The next year, ICICI bank followed suit and its ADRs made a debut at $14 on the NYSE, at a premium of over 27% over its issue price of $115,12,14.

ICICI acquired Bank of Madura in 2000 at a time when its own revenues stood at Rs. 2,500 crore (Rs. 25 billion) and that of the acquired bank at Rs. 100 crore (Rs. 1 billion). In October 2001, the board of directors of ICICI and ICICI bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI personal financial services limited and ICICI capital services limited with ICICI bank. The merger was approved by shareholders of ICICI and ICICI bank in January 2002, by the high court of Gujarat at Ahmedabad in March 2002 and by the high court of judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group’s financing and banking operations both wholesale and retail have been integrated into a single entity. ATM-on-Wheels, India’s first mobile ATM was launched in 2002 in Mumbai. Kamath introduced ATMs across the country using technology as an enabler. ICICI bank announced the setting up of its first ever offshore branch in Singapore, representative offices in Dubai and China and subsidiaries in UK and Canada in 2003. Its subsidiary in Russia and representative offices in Thailand, Indonesia and Malaysia were opened in 2006. It entered US and Germany in 20085,9.12.

With the turn of the millennium, ICICI emerged as the largest private bank in India and it was all due to the untiring efforts of Kamath. He right-sized the organization, expanded internationally and gave a fillip to its technology driven

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expansion plans, and set his eyes on making ICICI a universal bank. Kamath repeated his earlier success with ATMs by introducing cross-selling in ICICI banking system. He recognized the inconvenience faced by busy customers and brought in direct selling agents, who would reach customers easily, identify prospects and initiate dialogue. This not only helped ICICI deliver personalized banking facilities, but also changed the banking experience in India forever12. During Kamath’s tenure, the bank transformed itself from a staid development finance institution to a new-age commercial establishment and revolutionized the way banking services were delivered15.

Chanda Kochhar, a management graduate from Jamna Lal Bajaj Institute of Management Studies (JBIMS), Mumbai and a cost accountant, started her career as a management trainee in project finance department of ICICI in 1984. Over a span of 25 years, she worked across various functions in the bank before taking on her current position16. “Kochhar’s wide experience across the bank’s businesses would be invaluable in providing stability and charting the bank’s future in the emerging global environment,” ICICI said in a statement2. The career growth of Kochhar through the years is presented in Table 1 (Annex). She took over as Joint MD & CFO in October 2007, bringing under her purview; finance, planning and communications, global treasury, principal investments and trading, risk management, legal functions, compliance and internal audit. Known to be a practical innovator, Kochhar’s biggest achievement has been to bring doorstep banking to India’s retail banking system in 2001. She was the brain behind many of the innovations that have made ICICI bank the top private bank of India. She brought in many innovations like; ‘direct selling associates’ and ‘cross-selling’ into the system. In just five years, ICICI bank emerged as the country’s largest retail financer17.

ICICI Bank: The CurrenT STaTuS18

ICICI bank with a network of 1,456 branches, about 4,721 ATMs in India and presence in 18 countries was India’s

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second-largest bank with total assets of Rs. 3,793.01 billion (US$75 billion) and profit after tax of Rs. 37.58 billion for the year ending March 31, 2009. It offered a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. It had subsidiaries in the UK (with established branches in Belgium and Germany), Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Its equity shares were listed in India on Bombay Stock Exchange, the National Stock Exchange and its American Depositary Receipts (ADRs) were listed on the New York Stock Exchange (NYSE).

fInanCIaL PerformanCe of ICICI vIS-à-vIS ComPeTITorS (1997–2009)19

An overview of the financial performance of ICICI bank and two of its close competitors (HDFC and AXIS bank) in the private sector is given in Tables 2 to 4 (Annex) and is also briefly explained in the following paragraphs.

net-worth: Net-worth of ICICI bank had increased from Rs. 1.82 billion in 1997 to Rs. 495.33 billion in 2009 with a compound annual growth rate of 64.57%. During this period the net-worth of HDFC bank increased from Rs. 2.44 billion to Rs. 150.47 billion showing a compound annual growth rate of 42.43% and net-worth of Axis bank increased from Rs. 1.44 billion to Rs. 102.14 billion indicating a compound annual growth rate of 46.14%. Income: Income of ICICI bank had increased from Rs. 1.83 billion in 1997 to Rs. 310.93 billion in 2009 showing a com-pound annual growth rate of 58.16%. Whereas, during the same period the income of HDFC bank increased from

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Rs. 1.62 billion to Rs. 163.32 billion explaining a compound annual growth rate of 43.49% and the income of Axis bank increased from Rs. 1.58 billion to Rs. 108.36 billion high-lighting a compound annual growth rate of 38.66%.

Profit before Tax (PBT): PBT of ICICI bank had increased from Rs. 0.54 billion in 1997 to Rs. 51.14 billion in 2009 showing a compound annual growth rate of 54.82%. Whereas during the same period the profit before tax of HDFC bank increased from Rs. 0.58 billion to Rs. 32.99 billion indicating a compound annual growth rate of 38.37% and the profit before tax of Axis bank increased from Rs. 0.15 billion to Rs. 27.85 billion explaining a compound annual growth rate of 50.48%.

Profit after Tax (PAT): Profit after Tax of ICICI bank had increased from Rs. 0.40 billion in 1997 to Rs. 37.58 billion in 2009 showing a compound annual growth rate of 56.34%. Whereas during the same period the profit after tax of HDFC bank increased from Rs. 0.41 billion to Rs. 22.45 billion explaining a compound annual growth rate of 38.69%; the profit after tax of Axis bank increased from Rs. 0.15 billion to Rs. 18.15 billion highlighting a compound annual growth rate of 48.49%.

SPoTTIng anD DeveLoPIng LeaDerS aT ICICI20,21

ICICI had incomparable ability to spot, groom and deploy leaders in-house. Sanjoy Chatterjee (33) an almost unknown face to the outside world in 2002, was given the responsibility to head the bank’s UK subsidiary. Asking a young and relatively inexperienced executive to lead the bank’s opera-tions in a foreign country might have looked risky and reckless to many at that time. But in 2007, he was elevated to lead the bank’s critical international business and corporate banking divisions. Kamath knew that that was the only way the bank would be able to maintain its edge and growth going forward. Entrepreneurship and calculated risk-taking were the cornerstones of the Kamath’s model of leadership development. The process involved placing bets on a selected

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set of people and giving them bigger roles ahead of others. “It sometimes involved double promotions but he never played the salary game. He gave them projects that were challenging, something that were not available to young people of their stature elsewhere in the banking sector,” said Ram Kumar, group HR head.

Kamath recounted his original formula, “The entre-preneur was told that you have the support system of ICICI but a limited amount of capital. We will give you one good person whom you can pick. The rest of the team you will have to build and this is your business case. Detail your business case, build your team, tell how you will execute, start executing and report to the board on that basis. Thereafter, move it to a management by objective type of scenario where objectives are very clearly set, keep meeting those performance targets. Keep ramping up these targets if necessary, maybe correcting the strategy course as you go on.”

“It allowed the young business heads to evolve into leaders because they took the entire stress of building those businesses and getting them into shape and in the process they evolved into leaders. They had the cloud cover or the organizational support system. But the hard work had to be done by them,” said Kamath.

Kamath used to assess personal qualities like raw intel-lect, strength and weaknesses, openness to acknowledge one’s strengths and weaknesses, entrepreneurial ability to build business, and to identify the leadership potential of a person. He also instituted a star system for the top 5% of the bank’s talent. They were treated preferentially while giving away bonuses. This made some to strive to be stars and others who believed they can’t make the cut, simply leave. Kamath enjoyed the enviable reputation of spotting and grooming more leaders than any other CEO in India. Since 1996, when he took over as the bank’s head, Kamath created an incredible breeding ground that spawned leaders like; Shikha Sharma, Ananda Mukherji, Nachiket Mor, Chanda Kochar, Madhabi Puri Buch, Vishakha Mule and Bhargav Dasgupta, who have blazed their way to individual glory.

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“Kamath had an amazing ability to pick a leader and identify his/her potential way beyond what the people believed in,” said Kalpana Morparia, the bank’s Joint Managing Director.

But shortly after the long awaited reverse merger between ICICI and ICICI bank in 2000, the bank decided to make the transition from depending on Kamath’s personal genius to working off a formal system. Morparia and Ram Kumar told Kamath that it was impossible for him to know every senior leader personally when the bank was moving from 1000 member organization to a 7000 strong team. They put forward a list of names for Kamath to evaluate for a particular assignment and asked;

“How well do you know them, sir?”

Kamath knew a few on the list, but drew a blank on the rest. Next, came the emotional pitch;

“What would happen when you step down as CEO? We aren’t taking away your veto and judgment, but when we are 50,000 strong organization, you can’t do it all yourself. You simply won’t know who is where. Besides, wouldn’t it make more sense to pass on the secret of what it took to select and nurture talent to other leaders at ICICI, while you are still around?”

That last bit seemed to cut the ice, Kamath thought hard about his legacy and finally agreed. Since its inception, the shift from a CEO centric model to an institutionalized process of leadership development has evolved through several annual cycles. Ram Kumar, who modified the model for the bank based on his experience in mature organizations like, HLL and ICI, worked hard with the top team especially Kamath, Morparia and the ICICI bank board led by chairman Vaghul, to create a system that has consistently thrown up people that the bank needed to take up critical leadership roles across the ICICI group every year. While making the transition, ICICI continued to visit the best B-schools and hire the best chartered accountants, just as they had done since 1996. They also persisted with the entrepreneurial model that Kamath had consciously adopted. Each of the sub-businesses, be it ICICI Ventures, ICICI Home Finance, etc.

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were handed over to entrepreneurs, who were rated as core talent. The new process driven system displaced none of Kamath’s precepts. It was not a computer generated list of leaders rather human judgment prevailed. The new leaders were allowed to fail to an extent and every leader had two or sometimes three backstops, i.e. there was always someone to take the place. Performance targets were still sacrosanct but now the company did the vetting rather than just Kamath. Among the 15,000 odd managers across the group, about 2,000 were empanelled as leadership talent. To be considered as talent, a manager would have to be a top performer. “The assumption was that unless you were a performer, you won’t have credibility as a leader,” said Ram Kumar.

A thorough 360-degree appraisal was done for all those who were primarily identified as talent, which was then shared with each individual. The HR department then converted it into a data sheet and also wrote a one-page profile of each person and this was where the new talent assessment system took over. It covered all those empanelled as talent from joint managing director Kochhar to the lowest rung manager. All of them went through the same rigorous process. Kochhar’s assessment was done by the board of directors. For the rest, the HR department constituted seven to nine member skip-level talent panels drawn from across the organization. So in effect, a senior GM could assess a deputy general manager but not a general manager. Only people who were assessed as leadership talent could be part of the panel. “Our belief is that it takes a leadership talent to cite a leadership talent,” said Ram Kumar. Decisions had to be arrived at by consensus. In effect, the panel was a leaderless group. A person from human resource department tabled the names of the persons and also presented the data. At least two people in the panel should have known the person, other than his direct boss. Our belief was that if you were a talent, you couldn’t be somebody who was hidden somewhere. These people were then asked to list out their experience of the person. Armed with data, the panel took the call on the role that a potential leader could play. Was he good enough to be regional head or head of a national business? If it was a pack of 25 odd people at the top level,

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the panel had to figure out just how many would make it on the board. Similarly, if the panel decided that an assistant general manager was likely to make it to the national head’s role in the next one to two years he was classified as ‘A’ category talent. If he was likely to make the cut in 3 or 4 years, he was classified as a ‘B’ category talent and ‘C’ category if it was within 5–6 years. This formed the basis for making appointments when national level roles arose. In 2007, about 400 managers in ICICI bank were empanelled as category ‘A’ talent. About the system being foolproof, Ram Kumar said, “Mistakes do happen and as long as it is 10% to 15% of cases, it is fine. What we promise is that errors are possible, but biases are not.”

how To groom LeaDerS, ICICI STyLe20

Take very deliberate, calculated decisions: In order to groom leaders, it is very essential to take calculated decisions which are in fact risky for the organization, but also needs time. The similar strategy is used by the top management of ICICI. This deliberate step was taken by the bank as a predictor of phenomenal talent screening process of ICICI and its courage to bet on young and bright executives much ahead in their careers.

Train people to take the heat: Dealing with stress and pressure were part of life at ICICI. Executive directors were grilled at the board meetings which could prove to be an unnerving experience for new executives. Simulated training was given to potential board members to give them a real sense of an actual setting.

Don’t worry about going wrong on the calls you take: In judgement calls, the risk of going wrong could not be eliminated. In case a person failed, there was no witch hunting. It was treated as a part of the training cost. Multiple cycles were given to the guy before jumping to the conclusion whether to persist with him. The cut loss call was also taken aggressively.

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Perspective building is the key: The bank had been inviting academic institutes of international repute to organize leadership development programs. For instance, the Wharton School of the University of Pennsylvania designed a leadership development program for the senior managers of the ICICI group. An intensive, eight-day leadership program for nearly 60 senior executives was organized in October 2007 at the company’s training center outside Mumbai22. Harvard and McKinsey conducted programs for senior leaders. Films and case studies were used to help participants get a more holistic understanding of the social, political and economic situation in Africa, Latin America and China, key geographies that would prove crucial in the bank’s international foray.

Weightage for leadership development in computing annual bonus of leaders: In ICICI, for computing annual bonus, 50% weightage was given for leadership development. In such a case if the bank was forced to hire frequently from outside for its senior leadership roles, it was seen as a signal that the process wasn’t working well.

ICICI bank had also planned to set up a leadership institute to deploy leadership interventions on the lines of the GE model of leadership development. The bank had already acquired property in Panvel (Maharashtra) for the institute23.

SuCCeSSIon PLannIng aT ICICI Bank

The most important responsibilities for any business firm are its survival and growth and these can best be fulfilled by planning management succession to ensure the availability of the right number and right kind of management staff at the right time and in the right positions. “In a period of uncertainty and change, the impact that an individual leader has on a company can be very significant. So if the board of directors pick a wrong CEO, it could be very bad for the company. The right successor can make a big difference in giving the company the vision, verve and energy for taking

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on for the next 5 to 10 years. So as the board, the person you pick as the incumbent CEO is going to affect the company for the next decade or so,” said Professor Michael Useem, Director of Center for Leadership and Change Management at the Wharton School, University of Pennsylvania21.

The need for succession planning arose at ICICI as the term of one top level executive ended, one retired and two left the company and certain key level positions fell vacant due to succession planning which needed to be filled by finding more successors. Due to all these reasons, succession planning took place at large scale in 2009. ICICI bank had completed the succession planning for 3 major companies; ICICI bank itself, ICICI Prudential Life and ICICI Lombard. Succession planning at ICICI had not been a one day or one month process. When appointed as MD and CEO, Vaghul said, “The day I took office in 1985, I started looking for my successor. Something happened to me that there should be a person who should take charge. I had picked up Kamath as my successor in 1985, even though he became the CEO 11 years later, but my eye was on him24.” In early 2007, Kamath opined, “How well succession is carried out is a function of how well you are prepared and it does not start a year or two before; rather it starts three to five years in advance17.”

DISCoverIng a Ceo21,25

In April 2006, when the board first began to look at a process for managing Kamath’s succession, it brought in Wayne Brockbank, a professor at the Michigan School of Business. Brockbank was roped in by the management of ICICI bank in 1998 to help the bank to institutionalize a performance oriented culture and change management. He specialized on the theme of change management and performance oriented culture. Brockbank’s research and consulting focus had been on linkages between human resource practices and business strategy, creating high performance corporate cultures, and implementing business strategy through leadership. He made a presentation to the board on the best practices being

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followed on CEO succession around the world. But in the end, the board decided on a couple of guiding principles to be followed in the process of succession planning which were:

• It would not allow an external consultant to select the suc-cessor. Since, CEO succession was the board’s responsibility, so the buck had to stop with them.

• Kamath was co-opted into the CEO selection process and would help to manage the internal process so that it did not disrupt teamwork among the various candidates.

• The process and criteria had to be transparent and objective.

• They blessed a developmental process of using 360 degree feedback that had been put in place by Kamath, Ram Kumar and Brockbank in 2006.

360 Degree Feedback

“When you are a leader, you need to be respected by everyone around not just be subservient to the board. I am familiar with situations in other companies where if the board member’s ego is stroked, they might feel a candidate is very collegial and easy to get along with, but the candidate’s peers and subordinates may not concur,” said Marti Subrahmanyam a board member.

The 360-degree feedback exercise was being done internally. Between November 2005 and August 2006, each person who was being evaluated would have 20–25 peers and subordinates responding to a questionnaire. To ensure that feedback was specific and useful for every candidate, Brockbank first personally conducted in-depth interviews with 8–10 of the respondents to collect data. To ensure confidentiality, Brockbank did not discuss with Kamath, but worked closely with the CEO on the positives and negatives of every leader. Brockbank acted as a challenger to the internal picture and was the bias buster. While the 360 degree feedback exercise was being done internally, the board at a meeting in Jodhpur in 2007 decided to come up with the characteristics to be considered in the selection of

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the successor. In April 2007, the board came up with a long list of potential candidates for the position of CEO based on defined criteria and characteristics. Vaghul, along with Kamath, drew up a list of 11 senior officials from the group who were identified as the potential candidates to lead the bank. Those who were initially short-listed included; Chanda Kochhar (Joint MD & CFO, ICICI Bank), Shikha Sharma (MD & CEO, ICICI Prudential Life Insurance), Sandeep Bakhshi (MD & CEO, ICICI Lombard General Insurance), Renuka Ramnath (MD & CEO, ICICI Ventures), V. Vaidyanathan (ED, ICICI Bank), Madhabi Puri-Buch (ED, ICICI Bank), Sonjoy Chatterjee (ED, ICICI Bank), Vishakha Mulye (ED, ICICI Lombard), N. S. Kannan (ED, ICICI Prudential Life Insurance), Bhargav Dasgupta (ED, ICICI Prudential Life Insurance), and Nachiket Mor (Deputy Managing Director, ICICI Bank). Since these officials were short-listed, Brockbank has been monitoring the potential candidates besides helping in their developmental needs. Brockbank, along with bank officials created a detailed profile of the short-listed officials. These profiles were given to the governance committee (Vaghul, Anupam Puri, MK Sharma, PM Sinha, and Marti G. Subrahmanyam) of the bank, which was likely to take a final decision before the end of the year.

In October 2007, Nachiket’s sudden exit narrowed the field when he stepped down from the bank’s board to head ICICI foundation for inclusive growth, which handles the ICICI group’s philanthropy and development initiatives. A few months later, Vaghul decided to prune the list further by dropping Chatterjee, Vaidyanathan and Buch as they lacked enough relevant boardroom experience. Besides, the board needed folks who had the track record of building organizations, a very strong personal character and also sufficient public stature to fit into Kamath’s shoes21.

The bank adopted a new policy to interact with some of the key members of the ICICI group so that it could make a choice by April 2009, when Kamath’s term as the MD & CEO was about to end. The bank decided to invite Shikha Sharma (MD & CEO, ICICI Prudential Insurance) and Sandeep Bakshi (MD & CEO of ICICI Lombard General Insurance) to attend all board meetings and to make strategic presentations on

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their respective businesses and to give their views on some of the issues related to the bank. The intention was to bring to the forefront star performers in the group who have an equal opportunity to make it to the top as well as to adequately equip the board. This helped the governance committee in creating a level playing field and in making an independent judgment26. Finally, the tie for the top job was between two high profile women; Chanda Kochhar, joint managing director and CFO of the bank and Shikha Sharma, MD of ICICI Prudential Life Insurance. Brockbank spent a year during which he zeroed in on Kochhar after talking to peers, bosses and subordinates of six other senior bank executives including; Shikha Sharma, Sandeep Bakshi, Renuka Ramnath, Vishakaha Mulye, NS Kannan and Bhargav Dasgupta. However, the scale firmly tilted in favour of Chanda Kochhar because of her long association with the bank and her wide experience in various facets of banking and her equanimity. This helped her to have an edge over the other contenders in the fray for the top job. At the bank, Kochhar had been exposed to virtually all aspects of banking, except for global treasury and Shikha Sharma did not have any banking experience, which did not work for her27.

After the decision of the bank to appoint Kochhar as its MD and CEO, Shikha (founder MD & CEO of ICICI Prudential Life Insurance) decided to leave ICICI Prudential Life Insurance. She joined as MD & CEO of Axis Bank on 20 April 2009. Shikha took charge as the Managing Director and Chief Executive Officer (MD & CEO) of India’s third-largest private sector lender Axis Bank on June 2009. Apart from this new responsibility, Shikha had also been appointed as additional director on the Axis Bank’s board of directors. She was appointed for a period of five years. The exit of Shikha Sharma led to a decline in the shares of the company by Rs. 29.55, or 3.98%, to trade at Rs. 712.70. The total volume of shares traded was 1,125,776 at the BSE (2.42 p.m., Tuesday, 2 June 2009)28. After Shikha’s exit, ICICI Prudential Life appointed Vaidyanathan as the MD & CEO of the company with effect from May 1, 2009. He was an alumnus of Birla Institute of Technology and Harvard Business School. He was earlier an Executive Director with the bank and brought

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with him nearly two decades of experience in the financial services domain. He was also the chairman of ICICI Home Finance Company, and has served on the boards of ICICI Lombard General Insurance, and CIBIL (Credit Information Bureau India Limited), India’s first credit bureau. Since joining the ICICI Group in the year 2000, he had built a strong retail banking business which included 1400 ICICI bank branches in 800 cities, 25 million customers, US$30 billion in assets, a strong liability base, and a team of 26,000 employees. His contribution had been well recognized in the ICICI group and won him many awards in the banking industry. He was profiled among ‘India’s top 25 executives’ by a leading business magazine in India29. Sandeep Bakshi, MD & CEO of ICICI Lombard had been appointed as Executive Director of ICICI bank as a successor of Vaidyanathan. Bhargav Dasgupta, Executive Director of ICICI Life had been appointed as MD & CEO of ICICI Lombard in place of Sandeep Bakshi4.

Ms. Renuka Ramnath, MD & CEO of ICICI Ventures, tendered her resignation at the board meeting held on 20 April 2009. Renuka has been the MD & CEO of ICICI Venture since 2001 and has worked in the ICICI group for over 20 years. She began her career at the merchant banking division of ICICI and then headed the Corporate Finance and Equities businesses at ICICI Securities and moved back to ICICI in 1997 to set up a structured finance business30. She had teamed up with Sudhir Variyar, a long-term colleague in ICICI Venture, to start a private equity fund31. After Renuka resigned, Vishakha Mulye has been appointed as the Managing Director and CEO of ICICI Venture Funds Management Company Limited on 20 April 2009. Prior to this, Mulye held the position of an Executive Director at ICICI Lombard General Insurance since October 2007. She also held the position of the Chief Financial Officer at ICICI bank from 2005 to 2007. ICICI Venture has been in the news recently as its investments in the Chennai-based Subhiksha ran into rough weather, after the retailer suffered a cash crunch. Mulye joined ICICI group in 1993 and has various expertise in the areas of strategy, treasury and markets, proprietary equity investing and management of long-term

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equity investments, structured finance and corporate finance and project finance. ICICI Venture manages an aggregate corpus of $2 billion in private equity, buyouts, real estate and mezzanine assets30. The bank appointed NS Kannan (Executive Director of ICICI Prudential Life Insurance Company) on 24 January 2009 as the Executive Director and Chief Financial Officer on the board with effect from May 1, 2009, replacing Kochhar. Kannan is a postgraduate in management from the Indian Institute of Management, Bangalore with a gold medal for best all-round performance. He is also a Chartered Financial Analyst from the Institute of Chartered Financial Analysts of India and an Honours graduate in Mechanical Engineering. On 20 May 2009, ICICI Securities board had approved the appointment of Kannan as the Director as well as the Chairman on the board of the company. ICICI Securities is the investment banking arm of country’s biggest private sector lender32,33.

ICICI bank Analysts said, “Kochhar’s biggest challenges were to arrest the bank’s shrinking market share and restore confidence among its depositors and investors. India’s top private sector lender, which had a market capitalisation of $11.1 billion, and had lost 62% of its market value in year 2008 as a result of its exposure overseas at a time of turmoil in the global financial system. The bank had the largest exposure among Indian banks to the global financial crisis and its shares have fallen by about 28% since mid-September 2008 when Lehman Brothers collapsed. As the Lehman shock reverberated around markets the world over, both Kamath and Kochhar repeatedly assured investors and depositors that ICICI was safe and well capitalised2.

As Kochhar takes the baton, the hunt for her successor is on the way. However, succession planning at ICICI is a long process and the new CEO will have to start looking out once again. But that task may not be as easy for Kochhar as it was for Vaghul. Although Kamath will help her to look out, there are already rumblings that her peers are not quite pleased to play second fiddle, which means the nomination committee will have to look at the younger lot. “We have a very young team currently, so what we do is a lot of talent nurturing. I think we have a huge depth of talent and these

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are group resources and we can deploy people where we need the most,” said Kochhar. The bank’s current senior management comprises V. Vaidyanathan, Sanjay Chatterjee, Ram Kumar and N. S. Kannan serving as executive directors who could come into the consideration zone as Kochhar’s successor. But that also could mean an end to a long innings for women who have held important positions at the bank. “It so happened that the current group of talent, i.e. the women are coming to the fore. Maybe the cycle will change and the new group of talent, i.e. the men will come to the fore,” Vaghul said. Nevertheless, from Vaghul to Kamath and now to Kochhar, it has been a story of amazing planning and execution at ICICI24.

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Table 1. Profile of Chanda Kochhar34

2008 Appointed as CEO of ICICI

2006 Appointed as Deputy Managing Director of ICICI Bank

2001 Took over as Executive Director

2000 Led ICICI Bank’s entry in the Retail Banking business

1998 Promoted to General Manager and Head of the Major Clients Group

1996 Promoted to Deputy General Manager

1994 Promoted to Assistant General Manager

1993 Part of the core team to set up ICICI as a commercial bank

1984 MMS (Finance) from the JBIMS, Mumbai; Joined ICICI as Management Trainee

1982 Graduated from Jai Hind Collage as a Bachelors Degree in Arts (Economics)

1961 Born at Jodhpur, Rajasthan

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Table 2. ICICI Bank — An Overview of Financial Performance (1997–2009)19

(Figures are in Rupees)

Year Net Worth (billion)

Income (billion)

Profit Before Tax

(billion)

Profit After Tax

(billion)

Market Capitalization

(billion)

2009 495.33 310.93 51.14 37.58 370.27

2008 464.70 307.89 50.53 41.58 856.88

2007 243.13 219.96 36.45 31.10 767.18

2006 222.06 143.06 30.94 25.40 524.36

2005 125.49 94.09 25.24 20.05 289.56

2004 80.11 90.02 18.99 16.37 182.39

2003 69.33 93.68 7.78 12.06 82.12

2002 58.53 21.52 2.89 2.58 27.32

2001 12.89 12.42 2.26 1.61 32.56

2000 11.49 8.53 1.32 1.05 51.17

1999 3.08 5.44 0.93 0.63 4.52

1998 2.67 2.59 0.71 0.50 7.56

1997 1.82 1.83 0.54 0.40 ---

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Table 3. HDFC Bank — An Overview of Financial Performance (1997–2009)19



Income (billion)

Profit Before Tax

(billion)

Profit After Tax

(billion)


(billion)

2009 150.47 163.32 32.99 22.45 411.70

2008 114.97 101.15 22.81 15.90 467.83

2007 64.33 66.48 16.39 11.41 303.23

2006 52.99 44.75 12.54 8.71 242.21

2005 45.19 30.93 9.79 6.66 168.65

2004 26.92 25.49 7.19 5.09 107.75

2003 22.45 20.14 5.71 3.88 65.93

2002 19.42 17.03 4.25 2.97 66.16

2001 9.13 12.59 3.15 2.10 55.95

2000 7.52 6.79 1.95 1.20 62.28

1999 3.39 3.76 1.17 0.82 13.83

1998 2.85 2.41 0.94 0.63 14.29

1997 2.44 1.62 0.58 0.41 9.30

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Table 4. AXIS Bank — An Overview of Financial Performance (1997–2009)19



Income (billion)

Profit Before Tax

(billion)

Profit After Tax

(billion)


(billion)

2009 102.14 108.35 27.85 18.15 148.81

2008 87.69 76.05 16.46 10.71 279.43

2007 33.93 44.62 9.96 6.59 138.04

2006 28.72 28.89 7.31 4.85 99.31

2005 24.08 19.24 5.04 3.35 66.27

2004 11.36 15.99 4.29 2.78 33.98

2003 9.18 14.65 3.01 1.92 9.24

2002 6.15 11.79 2.13 1.34 7.65

2001 3.01 8.89 1.04 0.86 3.24

2000 2.39 4.83 0.79 0.51 5.22

1999 2.06 3.73 0.46 0.31 1.85

1998 1.59 2.56 0.28 0.17 ---

1997 1.44 1.58 0.15 0.15 ----

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referenCeS

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Concept Publishing Company, New Delhi 8. http://www.rediff.com/money/2002/may/03icici.htm 9. http://www.indianbanksinfo.com/indianbanks/ICICI/ index.asp10. http://en.wikipedia.org/wiki/ICICI_Bank11. http://www.onesource.com/free/Narayanan-Vaghul/People/

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history/ICI0215. http://economictimes.indiatimes.com/Opinion/Interviews/

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23. http://www.financialexpress.com/news/icici-bank-to-set-up-institute-for-leadership-development/90054/

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25. http://economictimes.indiatimes.com/articleshow/ msid-3553930,prtpage-1.cms26. http://economictimes.indiatimes.com/articleshow/2703356.cms27. http://www.livemint.com/2008/12/18234938/ICICI-Bank-CEO-

job-for-Kochhar.html28. http://myiris.com/shares/news/storyShow.php?fileR=20090602

144759194&dir=2009/06/0229. http://www.business-standard.com/india/news/ v-vaidyanathan-is-icici-prudential-life%5Cs-new-mdceo/358092/30. http://www.thehindubusinessline.com/2009/04/21/ stories/2009042151930600.htm31. http://www.mydigitalfc.com/companies/renuka-ramanathan-

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indian-banking.html

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Documents

Leadership Development and Succession Planning at ICICI Bank