There has long been a debate on comparative merits (and of course demerits) of professional managers and promoter managers. The recent controversies involving Yes Bank and ICICI Bank have settled the issue. There isn't much to choose between the devil and the deep sea.
Chanda Kochhar had her bonuses clawed back and deservedly so. Yes Bank is yet to extend a similar treatment to Rana Kapoor. It is difficult to say who has betrayed the bank more. Apart from settling the controversy regarding professional vs promoter, they have also proved there is no gender difference as far as managerial misdemeanours go. Lehman Brothers would have failed had it been Lehman Sisters also!
The Reconstruction scheme of Yes Bank is a bit dicey. It readily attracts legal challenge. Investors in perpetual bonds have two credible grounds to assail the write-down of these bonds. One is that their interests cannot be sacrificed before a similar treatment is meted out to existing equity holders. Secondly, since the bank has come to grief because of reported frauds by the promoter, the bank is liable to compensate the bond holders. The bank cannot gain from misdeeds of its promoter.
Chanda Kochhar had her bonuses clawed back and deservedly so. Yes Bank is yet to extend a similar treatment to Rana Kapoor. It is difficult to say who has betrayed the bank more. Apart from settling the controversy regarding professional vs promoter, they have also proved there is no gender difference as far as managerial misdemeanours go. Lehman Brothers would have failed had it been Lehman Sisters also!
The Reconstruction scheme of Yes Bank is a bit dicey. It readily attracts legal challenge. Investors in perpetual bonds have two credible grounds to assail the write-down of these bonds. One is that their interests cannot be sacrificed before a similar treatment is meted out to existing equity holders. Secondly, since the bank has come to grief because of reported frauds by the promoter, the bank is liable to compensate the bond holders. The bank cannot gain from misdeeds of its promoter.
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