Bandhan Bank Faces Stock Plunge as CEO Resigns Abruptly

Bandhan Bank witnessed a sharp 9% decline in its share price following the unexpected resignation of its Managing Director and Chief Executive Officer, Chandra Shekhar Ghosh. The resignation announcement has raised concerns among investors and analysts alike.

On April 05, Bandhan Bank officially acknowledged Ghosh’s letter notifying the board of directors about his decision to retire from his current role as MD & CEO, effective July 09, 2024. Ghosh, who has been leading the bank since July 10, 2015, will step down just shy of the end of his tenure.

Jefferies, a foreign brokerage firm, was quick to react by downgrading Bandhan Bank’s rating to ‘Underperform’ from ‘Buy’. The firm also slashed the target price on the bank’s shares to ₹170 from the previous ₹290, citing concerns over the sudden change in leadership and its potential impact on the bank’s performance and growth prospects.

Similarly, Nomura revised its rating to ‘Reduce’ from ‘Buy’ and reduced the target price to ₹175 from ₹275. The brokerage firm highlighted the uncertainties surrounding the bank’s future, especially in terms of liabilities, asset quality, and growth trajectory.

The unexpected exit of the CEO has put Bandhan Bank under scrutiny, with investors wary of the implications on the bank’s operations and overall stability. Several other financial institutions, such as Ujjivan SFB, RBL Bank Ltd, and YES Bank Ltd, have experienced similar high-profile exits in the recent past.

ICICI Securities expressed concerns over the timing of Ghosh’s resignation, noting that the transition comes at a crucial juncture when the bank is still grappling with asset quality issues. Likewise, Arihant Capital Markets suggested that Bandhan Bank could face lingering pressure due to the departure of key figures from its leadership.

While Ghosh indicated an interest in pursuing a broader role at the group level, questions remain about the bank’s future path and the potential impact on its recovery trajectory. Analysts from Emkay Global Financial Services cautioned that the leadership vacuum could result in business uncertainties and potentially hinder the bank’s ongoing efforts to strengthen its asset quality.