Barely two years after taking charge PR Somasundaram today resigned as the managing director and chief executive of Lakshmi Vilas Bank due to "personal reasons". He became the third old-generation private bank CEO to tender resignation this year.
According to sources, Somasundaram, who joined the Karur-based private lender from Standard Chartered Bank in August 2010, was finding it difficult to operate in an environment where promoters were not always ready to adopt new practices and the regulator was often questioning some of the bank's business dealings with group companies of an Indian business tycoon.
Somasundaram was not immediately available for comments.
The board of directors has decided to handover the charge to the bank's executive director KSR Anjaneyulu with immediate effect. The board will meet soon again and send names of three candidates to the Reserve Bank of India (RBI) for the position of CEO. It is believed Anjaneyulu will be one of the candidates to get recommendation from the board.
In February, 2012 Amitabh Chaturvedi had quit as managing director and chief executive of Dhanlaxmi Bank following serious disagreement with other board members over the functioning and management of the bank's operations. PG Jayakumar took charge as the new chief executive of the bank following his move.
Tamilnad Mercantile Bank also saw its managing director and chief executive AK Jagannathan leaving the bank earlier this year citing personal reasons.
While not many bankers are willing to speak on record but on condition of anonymity they reveal that professional chief executives hired by some of the old-generation private banks have to deal with promoters who are breathing down their neck or employee unions resisting any change in practices.
"It is not easy especially since they worked in foreign banks and multi-national companies and took hefty pay cuts for joining the old-generation banks," said a banker familiar with the development.
Lakshmi Vilas Bank also saw a few of its senior executives quitting in the past couple of years. Its executive director Rajat Baldhi had quit in the second half of 2011.
The chairman's position in Lakshmi Vilas Bank has been lying vacant for more than a year now even though the lender has identified one of its board members KR Pradeep, who also has minority stake in the bank, for the role and sought RBI's approval for the appointment.
RBI had also questioned the bank's corporate governance standards and its failure to cut promoters' stake to 10%. Promoters owned 11.1% stake in the bank at the end of June, 2012.
