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Exclusive: India’s HDFC Bank taps Egon Zehnder to identify Aditya Puri’s successor

By Rupam Jain and Nupur Anand

MUMBAI (Reuters) – India’s HDFC Bank <HDBK.NS> has chosen global executive search firm Egon Zehnder to identify a successor to managing director Aditya Puri, the country’s top private lender said on Thursday.

Reuters had reported earlier on Thursday that the HDFC Bank board had tapped the global head-hunting firm in a bid to end a boardroom impasse over Puri’s successor and zero in on a candidate.

Four sources familiar with the discussions told Reuters that a six-member internal search committee, appointed in November last year, has been unable to reach a consensus on selecting a successor to Puri, who has been at the helm of HDFC Bank since its inception in 1994.

“Egon Zehnder has been recommended by the search committee and unanimously appointed by the bank’s board,” Neeraj Jha, a spokesman for HDFC Bank, said in an email.

Puri, whose term comes to an end in October this year, is also an adviser to the search committee.

“The latest decision to hire a global advisory firm has been taken after the search committee members realized that they have been struggling to come to a consensus on the final name,” said a source familiar with the internal deliberations among members of the committee.

“The deadline for Puri’s successor is nearing … the bank will have to appoint someone who can continue to push for growth despite an economic slowdown,” the source added. According to HDFC Bank, Puri is 69 years old.

As per regulations, the bank will need to get approval from the Reserve Bank of India (RBI), before any new appointment can be confirmed. HDFC Bank is one of three domestic lenders that the central bank has designated as “too big to fail”.

Egon Zehnder, which declined to comment on the matter, had in 2018 also helped Axis Bank <AXBK.NS>, another private lender, to find its chief executive officer.

A second source at HDFC said the differences between the top leadership over the succession has been the crucial reason for the delay in identifying a new managing director.

The sources said Puri and Deepak Parekh, the chairman of India’s largest housing finance company HDFC <HDFC.NS> which owns a minority stake in the bank, have been at loggerheads over the bank’s succession plan, with both advocating their preferred candidates to secure the job.

Puri’s preferred choices include HDFC Bank’s executive directors Bhavesh Zaveri, Sashidhar Jagdishan and Kaizad Bharucha, said three of the sources.

Two of those sources also said Parekh has been rooting to reinstate Paresh Sukhtankar, who resigned as Puri’s deputy in 2018.

Sukhtankar, who joined the bank alongside Puri in 1994 was widely expected to be Puri’s successor. Reasons behind his departure remain unclear.

Regarding questions about names in the fray and differences between Puri and Parekh, HDFC Bank’s Jha said that “information is speculative and incorrect”.

Parekh and Puri personally did not respond to requests for comment on Thursday.

Sources said the search committee, in a bid to defuse the tension, had also contacted top banking executives working overseas to find a candidate acceptable to Puri and Parekh.

The board members held preliminary discussions with Indian-origin bankers Piyush Gupta, CEO of DBS Group <DBSM.SI>, and Ajay Banga, CEO of Mastercard Inc <MA.N>, about the job, two of the sources said.

The outcome of these discussions was unclear.

A spokesman at DBS Group told Reuters in an email that “Piyush is happy at DBS and has no plans to leave”.

Seth Eisen, senior vice president of communications at Mastercard, said Banga has not had any conversation with HDFC Bank regarding the position.

Analysts tracking the bank said Puri has run it with an iron hand, preventing it from accruing a high level of bad loans at a time when most of its peers were struggling.

“The new successor needs to have a vision to be able to spot opportunities and constantly stay ahead of the curve which is what Puri has been doing,” said Suresh Ganapathy, head of financial services research at Macquarie.

Puri, the highest paid banker in India with remuneration of 136.7 million rupees ($1.92 million) excluding stock options, had been seeking another term as managing director, two of the sources said.

However, the central bank has been firm that chief executives of private banks must retire at the age of 70.

(Reporting by Rupam Jain and Nupur Anand in Mumbai; Editing by Euan Rocha, David Evans and Muralikumar Anantharaman)