Business Today

Don't look, we're changing

In the post-Kamath era, the ICICI Group has a new game plan for growth and a new team to execute it - but will it miss the old guard?

twitter-logoAnand Adhikariand twitter-logoRajiv Bhuva | Print Edition: September 19, 2010

November 27, 2000: At General Electric's Fairfield headquarters in Connecticut in the United States, legendary Chairman Jack Welch announces that Jeffrey Immelt will take his place. This ends one of the longest succession planning exercises in history - it had started in 1994. On September 7, 2001, Immelt, who headed the medical imaging division, walks into the conglomerate's corner room. Four days later, terrorists crash planes into the Pentagon and the twin towers of the World Trade Center.

The US economy, which is attempting to recover from the recent tech-wreck, slumps, and takes GE along with it. Immelt's baptism by fire has just begun. In less than 90 days after GE gets its new CEO, the two others in the succession race, James McNerney and Robert Nardelli, move on.

McNerney, who headed GE's aircraft division, joins technology giant 3M as its CEO. Nardelli, who was known as 'Little Jack' after his mentor, goes on to head home improvement retail chain Home Depot. Immelt goes about the task of putting GE on the road to recovery and back to the glory days of Welch, during which growth was in robust double digits and the stock price zoomed.

December 19, 2008: At ICICI Bank's headquarters in Mumbai's Bandra-Kurla commercial district, CEO K.V. Kamath announces that Chanda Kochhar will succeed him at India's largest private sector bank. On May 1, 2009, the former Joint MD picks up the reins against a backdrop of a global recession and a liquidity crisis in the global financial markets. Days before that, Shikha Sharma, considered as one of the candidates to whom Kamath could pass on the baton, calls it a day at ICICI's life insurance subsidiary and moves on to head Axis Bank.


What do JP Morgan, Nokia, Alstom and Goldman Sachs have in common? They all have former ICICI head honchos in key positions - either heading the Indian operations or on the global boards. Lalita Gupte, a former Joint Managing Director at the bank, is today on the boards of Nokia and Alstom. Kalpana Morparia, another Joint MD when she retired from ICICI Bank, heads JP Morgan's India operations, besides being a member of the New York-headquartered global strategy team and the JP Morgan Asia-Pacifi c Executive Committee. Sonjoy Chatterjee, a former ED at ICICI Bank, recently joined as MD and Co-CEO of Goldman Sachs' domestic franchise.

That gives you a fl avour of the "talent farm" - as MD and CEO Chanda Kochhar puts it - that ICICI Bank has created over the years, not unlike a Citibank or a Hindustan Unilever. "We have created plenty of topnotch talent in the past five years, which has built and run businesses. Those looking to grow in such businesses will be eyeing our talent farm that exists because of the talent base we have built over the years," says Kochhar.

Indeed, ICICI Bank, with its myriad businesses that range from corporate to retail banking and from SME to rural and international, offers tremendous opportunities for growth. And then there are the subsidiaries - investment banking, insurance (life and general) and venture capital. To be sure, a number of professionals - including Kochhar herself have got opportunities to head multiple businesses over the years.

For instance, project fi nance professional like Shikha Sharma was deputed set up the life insurance subsidiary. Under Kochhar's leadership, seasoned bankers like Madhabi Puri Buch, Vishakha Mulye and Bhargav Dasgupta have been deputed to head the non-banking subsidiaries - ICICI Securities, ICICI Venture and ICICI Lombard, respectively. "It's like a military exercise," says K. Ramkumar, Executive Director. "Nobody says no when they are given an assignment that is away from their comfort zone." The worry for Kochhar, however, is the increasing number of senior professionals who are saying yes to apparently greener pastures.

Within 14 months of Kochhar taking charge, two other candidates screened for the top job, V. Vaidyanathan and Sonjoy Chatterjee, leave the ICICI Group. It's a new-look top deck at ICICI Bank - which has the challenge of returning the bank to the glory days during Kamath's time when growth rates of 30-35 per cent were par for the course.

No two succession plans are ever the same, yet the circumstances are not dissimilar. Both successors began their tenure in a challenging environment - after years of gung-ho growth that their predecessors could take credit for. If Immelt had to deal with a stock that just wouldn't move, Kochhar had to fight perceptions that ICICI had a huge exposure in a bankrupt Lehman Brothers (its exposure was actually minimal) even as back home the bank's adventurous moves in unsecured lending were beginning to backfire. And both Immelt and Kochhar suddenly realised that they had to build a new top team, as the wannabe CEOs jumped ship.

In many ways, it's a delightful dilemma for Kochhar to be in. Sure, she will miss the veterans who between them (Sharma, Vaidyanathan and Chatterjee) would have put in 56 years at the ICICI group. But, at a time when the bank has been continually, in Kochhar's words, calibrating its strategy to adjust to the changing economic realities, some fresh faces at the top would not be a bad thing at all.

And again, as Kochhar is quick to point out, the top team may be new but it is by no means raw. Almost everybody in the new team has spent between 15 and 24 years at the ICICI group (see The New Guard at the Top). "I would not say it is necessary (to have a new team), but over a period, new jobs and new roles help in the personal growth of a professional. I have myself done many jobs within the group," says Kochhar, who has worked across ICICI's various businesses, right from corporate to retail, from treasury to international.

It's not just those who were on the succession shortlist that have bid adieu to ICICI Bank. What could also hurt the bank are the high-profile honchos who have left - a few were let go, insist ICICI Bank officials. Such departures have taken place across the group since Kochhar assumed charge. For instance, around the time Sharma left for Axis Bank, Renuka Ramnath quit as head of the venture capital arm, ICICI Venture, to branch out on her own. Months later, Sudhir Variyar, a senior director at the venture capital firm, joined Ramnath.

And in May this year, three more senior executives - a president Jayanta Banerjee and two directors, Anand Vyas and Sunay Mathure - put in their papers to start their own private equity fund. At the time of writing, BT learnt that Nachiket Mor, who was also at one time considered a worthy successor to K.V. Kamath, and who has been heading the ICICI Foundation, was on his way out.

Rarely does a company lose half a dozen of its topnotch talent in a little over a year. And when the organisation is the largest private sector bank, it's difficult not to take notice. "An organisation does get impacted if the top talent nurtured by them leaves in a huff," believes E. Balaji, CEO, Ma Foi Management Consultants, a human resources service provider.

Perhaps ICICI Bank has become a victim of its own success in creating a sturdy talent base. And just like Citibank and Hindustan Unilever (once upon a time), India's second-largest bank that employs 35,256 people, as on March 2010, may have become a ripe and ready farm for those looking to reap talent (see Poacher's Paradise).

"When an organisation grows at 35-40 per cent per annum for 10 years and adds 10 new businesses during that period, young professionals get the kind of exposure they would not have got anywhere else. We have groomed people to build and run businesses like insurance, securities and retail. So if other players are looking to grow who would they pick? The best person would be someone who has already run the business," reckons Kochhar.

New Faces at the Top
With yesterday's prima donnas no longer occupying the offices on the 10th floor of the corporate headquarters, decision-making in a challenging economic environment becomes easier for Kochhar. "Consolidation does call for some not so pleasant and not so popular decisions," says the CEO who has spent 26 years in ICICI.


  • Rajiv Sabharwal, Executive Director, Retail, Rural, SME and Mid-Corporate
    This IIM Lucknow alumnus is back with a bang to manage the key portfolios at the bank. His re-entry has bruised many egos
  • N.S. Kannan, Executive Director & CFO
    This IIM Bangalore number cruncher takes over Kochhar's portfolio. He was CFO in 2003, too
  • Zarin Daruwala, Group Executive, Wholesale Banking
    Another rising woman professional at the bank. She will drive corporate banking, reporting directly to the CEO
  • Vijay Chandok, Group Executive, International Banking
    Fresh at the top, he helped build the bank's SME portfolio. Faces a tough international assignment
  • K. Ramkumar, Executive Director, HR, Operations and Customer Service
    He retains his portfolio amidst the flux. This ex-HLL man is the team's senior-most member
Executive Director K. Ramkumar, who has human resources as one of his main functions, is unlike many of the bank's past EDs - he's low-profile, modest and not a poster boy by any yardstick. "None of us is a rock star," he declares. "That makes it easier for us to work together without any ego hassles."

Indeed, there are many who consider the exodus more of a purge. K. Sudarshan, Managing Partner, India, at EMA Partners International, an executive search firm, works closely with ICICI Bank."It's not the individuals alone that make a difference in large institutions like ICICI. Here, it is the systems and the organisation that has been built that are the key ingredients for success," says Sudarshan.

Like Ramkumar, whose responsibilities also include customer service and operations, the others in the top deck at ICICI Bank lack the glamour of the previous pack - at least as of today. The new faces include Zarin Daruwala, who as Group Executive (one level below executive director) is in charge of wholesale banking. She was in corporate banking earlier, and has spent 21 years at the bank.

Kalpesh Kikani, who has been with the bank for 15 years, heads transaction banking. Vijay Chandok, who helped build a strong SME portfolio for the bank, has been given the mandate of heading international banking. And Anita Pai, a former ED at ICICI Prudential, has been roped in to assist Ramkumar with customer service - an area where the bank has a lot of work to do.

"There is a generational change in leadership and we are seeing the emergence of new leaders," says EMA's Sudarshan. Adds Akhil Jindal, a director at the Welspun group, which has taken a term loan and a working capital loan from ICICI Bank: "The changes will help in serving the customer better and in expanding the business."

Kochhar has also done well to attract some of the talent that left the group. The biggest catch here is Rajiv Sabharwal, who had quit ICICI as a senior general manager in the mortgages division in December 2008 to join Sequoia Capital. He's back with a bang as an ED in charge of retail banking, rural banking and SME and mid-corporate business - all key strategic growth areas for the bank. That probably makes him the second-most powerful professional at ICICI Bank, after Kochhar.

When Kochhar talks about making unpleasant decisions, bringing back Sabharwal would surely have been one of them. For, as one bank insider puts it: "That was a big turning point as it shattered many egos within the bank." Sandeep Bakhshi, the Deputy Managing Director handling retail, had to give up his portfolio to accommodate Sabharwal. Bakhshi went on to handle corporate banking, which has been Kochhar's area of focus in the consolidation phase as ICICI seeks to de-risk its portfolio to include transaction banking.

Gut vs Reason

Tell Chanda Kochhar that she's perceived to be a very hands-on leader, as against her predecessor K.V. Kamath's penchant for delegation, and she's quick to make her point. "That may seem the case if you compare my fi rst year with Kamath's last," she says, with her trademark smile. She goes to explain that Kamath would have been a completely involved CEO when he was transitioning ICICI from a development fi nancial institution into a growth-oriented retail bank 8-10 years ago.

In many ways, Kochhar is today at a point where Kamath was early on in the decade. Both had to make strategic shifts. If going for growth became Kamath's priority, consolidation has pretty much been Kochhar's agenda for the past 15-odd months as ICICI Bank got caught up in the global credit crisis.

And it's been a challenging period, with growth taking a backseat and capital conservation becoming the buzzword. "Some would believe that managing growth is easier than managing consolidation, but the latter requires lot of work - and one has to make not so pleasant and not so popular decisions. (But) it is important for a leader to keep calibrating the strategy in line with the external environment," explains the 48-year-old head of India's second-largest bank.

Yet, if you leave strategy and the external environment aside, and focus on the management styles of the two individuals, they couldn't be more different. "Kamath uses gut a lot," points out K. Ramkumar, Executive Director at ICICI Bank. And his style of mentoring was of the swim or sink variety. "He always believed in empowering young professionals with big responsibilities," believes Kalpana Morparia, who retired from the bank in 2007 as a joint MD, and who now heads JP Morgan's India operations.

His successor likes to get her hands into the nitty-gritty. "She is a person who will weigh everything," says a senior professional who has worked with Kochhar in the past. "She doesn't mind saying: 'Let's go over it one more time'," he adds. A mid-level manager who worked with the bank is more blunt. "She is a control freak," he says.

Kamath has earned himself the sobriquet of a visionary - a man who saw tomorrow's big picture. Kochhar's journey has just begun. As she prepares to deal with the challenge of taking ICICI Bank back to the heady days of robust double-digit growth, the results will determine how similar - or how different - she is from her predecessor.

As ICICI Bank made a shift in strategy from growth to consolidation, it had to reshuffle its people accordingly to meet its new goals. For instance, Vaidyanathan was shifted from the bank, where he headed retail, to the life insurance subsidiary; and Sandeep Bakhshi was pulled out of the general insurance arm to manage the retail portfolio (before Sabharwal was drafted in). "Sandeep is a consolidator and Vaidyanathan a growth manager," explains Ramkumar. In the post-credit crisis period retail did not require a flamboyant sales guy, he adds.

Clearly, at ICICI, strategy is not a slave to structure."What is more important is whether the bank is able to find a replacement within 12 hours of an exit," says Ramkumar. The talent pool is indeed deep - deep enough for ICICI to pitchfork some of its dyed-in-the-wool - and still young - bankers into the non-banking businesses.

For instance, Madhabi Puri Buch, a former ED at the bank, heads the securities business, ICICI Securities; Vishakha Mulye, the bank's Chief Financial Officer till October 2007, heads ICICI Venture; and Bhargav Dasgupta, head of ICICI Lombard, the non-life insurance subsidiary, began life in ICICI in 1992 in the projects and corporate finance division. He has also had a stint at the life insurance subsidiary as ED in charge of sales, distribution, product development and marketing.

Since Kochhar took over, her thrust on consolidation meant that ICICI focused on four Cs: a higher CASA (current account, savings account) ratio, which is a function of getting lowercost deposits; cost control; improved credit quality; and capital conservation. ICICI has made progress in improving on many of these parameters, and Kochhar now feels the stage is set for the bank to once again get into growth mode. "We are moving from four Cs to five Cs. Credit growth will replace capital conservation. And as we grow credit we have to keep in mind customer service - which will be the 5th C," says the CEO.

N.S. Kannan, the CFO, feels that ICICI is ready to hit double-digit growth. In the current financial year he expects the domestic loan book to grow by 20 per cent, and the international loan book to grow in single digits. He acknowledges that growth won't be as much as in the Kamath era, but a 15-17 per cent growth of the total loan book is doable.

Growth is indeed a priority for ICICI, what with the state-owned Punjab National Bank (PNB) claiming it is the country's second-largest bank in terms of total business (ICICI is the second largest in terms of total assets, see The Kamath ICICI Bank Has to Watch Out For, BT, June 13). The recent merger with Bank of Rajasthan may have been done precisely with that in mind. With BoR in the bag, ICICI Bank's total business will increase by Rs 23,000 crore, taking it comfortably over Rs 4 lakh crore. Its branch network will also increase by 25 per cent to 2,500.

As ICICI cautiously gets back to the growth path, it will need a healthy mix of "consolidators" and "growth managers" as it begins to venture out and increase the pace, particularly in retail. That's where analysts feel the experience and aggression of the likes of Vaidyanathan will be sorely missed. But, as Ramkumar points out, that's exactly why Sabharwal has been brought in. In the new dispensation, nobody is irreplaceable - not yet, at least.

Towards Service-led Growth
At ICICI Bank's headquarters, retail isn't talked about with the same passion and optimism as it was in the pre-2008 days. Still, as economic conditions improve, and both investment and consumption-led growth rev up, Kochhar would like both corporate and retail to be her twin growth engines.

However, if retail growth has to kick in without an accompanying deterioration in asset quality and profitability, ICICI has to get its customer service right. Ramkumar declares that the next phase of growth will not be acquisition-led but service-led. "In the next three to five years, we shall be a service icon of India. We want to get rid of the growth-hungry aggressive image," he adds.

ICICI has a long line of dissatisfied customers. These range from account holders who found large sums of money withdrawn without their consent to customers who have been declared credit card defaulters even though they don't own any plastic. Arun Saxena, President of the International Consumer Rights Protection Council, narrates an incident where the credit card was issued to a dead person. "ICICI Bank has the worst grievance handling system," he says.

The situation in corporate banking was not much different as many customers felt cheated by the bank, especially those who were lured into buying exotic forex derivatives. "We have done an out-of-court settlement as there was no point dragging the issue," says the CEO of a mid-sized company. Kochhar is conscious of this lacuna, and that's why she's brought in Anita Pai to act as a pivot around which service integration will happen.

Growth on the back of a contented customer base is imperative for ICICI to hit the next level. "That would give us the momentum to become one of the top 20 banks in the world over the next five years," says Kochhar. The consolidator is keen to slip into the fast lane of the growth leader. A year after Immelt took over from Welch at GE, he is reported to have said: "I am a different generation from Jack …I have a different view of the world." Kochhar would love to be in a position to say something similar.

"Consolidation Calls For Not So Popular Decisions"

Excerpts from an interview with ICICI Bank MD & CEO Chanda Kochhar

On ICICI Bank's evolving strategy:
The change in the economic environment prompted us to calibrate our strategy accordingly. That calibration itself had two phases. The first phase of consolidation is over and the next phase is of consolidation as well as growth. We have a five-year vision to grow along with India's economic growth. That will also give us the momentum to become, maybe, one of the top 20 banks in the world over a five-year period. Credit growth will now replace capital conservation in our strategy and, as we grow credit, we have to keep in mind customer service.

On a new team for a new strategy:
I don't think it (a new strategy) calls for a new team. Besides, the team is not really new, as almost everybody in it has spent between 15 and 24 years in the ICICI Group. But at the same time in the last one to two years what we have done is another round of changes after almost a decade by putting people in new functions. I would not say it is necessary, but people doing different jobs over a period helps their personal growth.

On the exit of top-level professionals:
It's natural when an organisation grows at 35-40 per cent per annum for 10 years and also adds 10 new businesses in that period. What we did is pick young professionals and give them an exposure they would not have got anywhere else. We have people who have built and run businesses like insurance, retail lending and securities, to name just three. Today, when other players want to grow to our size, obviously they will look at our people - the best people would be those who have already run such businesses. Today, the ICICI Group has become a talent farm for the industry.

On whether she is a growth manager or a consolidator:
I don't mind being called a consolidator. In the last five quarters, I have focused only on consolidation. It was necessary. Believe me, it was not easy. It requires a lot of work - and one has to make not so pleasant and not so popular decisions.

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