UTI Bank splits CMD's post, Nayak to retire

Nayak refused to accept MD's post; term expires on December 30.

The UTI Bank's board has decided to split the post of chairman and managing director after a marathon meeting lasting over 5 hours till 9.30 pm on Wednesday.

The bank will now have an ex-officio chairman and a full-time managing director. The current chairman and managing director of the bank, PJ Nayak, was offered the managing director's post by the board but he refused to accept it.

Nayak's five-year term expires on December 30, 2004.

Flummoxed by the development, a UTI Bank executive said: "We are unable to understand the need for the split. We were doing very well in the previous model."

Mutual fund major UTI-I, which is the majority stakeholder in the bank, will now have to nominate both the chairman and the managing director by December 30.

Banking sources said one of the promoters mooted the idea at the meeting but added that performance could not have been the reason.

Nayak was seen "too strong" a personality to hold the top post, the executive added.

Nayak has been credited with bringing UTI Bank out of the woods. He improved the asset quality of the bank and repositioned it with emphasis on the retail sector.

The bank has been growing at a steady 30 per cent quarter on quarter. Prior to his appointment as chairman and managing director of UTI Bank on January 1, 2000, Nayak was the executive trustee of Unit Trust of India.

An Indian Administrative Service cadre, Nayak joined UTI in 1996. Between 1990 and 1995, he worked as joint secretary at the department of economic affairs in the finance ministry.

UTI Bank is the only Indian bank being chased by two UK financial heavy weights -- HSBC and Barclays Capital. The bank was in the limelight early this year, when HSBC tried to purchase over 20 per cent stake in the bank.

The Reserve Bank of India finally gave the UK bank permission to purchase only 14.6 per cent. Barclays Capital holds 4.5 per cent in the bank.

UTI Bank's share price fell by 1.86 per cent yesterday on the Bombay Stock Exchange to Rs 174.55. The share price has risen by over 13 per cent since the start of November.

Unit Trust of India (UTI) is the majority shareholder in the bank with over 33 per cent stake. UTI, Life Insurance Corporation, General Insurance Corporation and its four subsidiaries promoted UTI Bank in December 1993.