Banks join the bandwagon, launch stock options

With the BSE Sensex trading in positive territory, a fresh wave of allotment of employees stock option schemes (Esops) in the banking space have hit the market. ICICI Bank, UTI Bank and Kotak Mahindra Bank informed stock exchanges about allotment of shares to their employees.

ICICI Bank informed the Bombay Stock Exchange allotment of 4,62,298 equity shares of Rs 10 under the employees stock option scheme, 2000. The bank has allotted 13,000 equity shares to its executive director Chanda Kochhar and 56,000 shares to another executive director Nachiket Mor.

Another new generation private sector bank, UTI Bank, has made an allotment of 11,01,995 equity shares of Rs 10 each to the employees of the bank, under Esop.

Kotak Mahindra Bank made a grant of 42,600 stock options to the employees of Kotak Mahindra Old Mutual Life Insurance Ltd, one of the subsidiaries of the bank on May 14.

The exercise price of the options is Rs 200 per share. Thirty-three per cent of the options are exercisable between June 1, 2006 and March 1, 2007; a further 33 per cent between June 1, 2007 and March 1, 2008 and the balance 34 per cent between June 1, 2008 and March 1, 2009.

"Allotment of Esops has been a popular practice among information technology (IT) companies. Now, this trend is seen in banking companies," said a senior banker.

Over a period of time, banks have realised that allotment of Esops is the best form of rewarding an employee. It also helps banks control attrition, he added.

"The banking space has seen a rapid transformation in the past one year," said a senior banker. With the growing competition management and retention of human resource is a main challenge for bankers.

Allotment of Esops enables banks to check retention and increase employee productivity, said senior bankers.