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ICICI Bank Cleaning Up its Act, China Retaliates et al

Professor of Financial Economics and Part-time Value Investor, Transfin.
Sep 19, 2018 12:32 PM 3 min read
Editorial

Good evening readers,

 

The stubbornness of ICICI Bank's MD & CEO to stick around, thanks to an awkwardly reverential Board warrants justifiable outrage. 

 

"It is not a matter of legality, it is a matter of propriety which comes with a high office. And being CEO of one of India’s largest listed private sector banks is a sufficiently high office. As the top management officer appointed by the Board and by extension the shareholders, the onus is on you.

 

Corporate officers should be held to the same standards of scrutiny and probing usually reserved for public servants/politicians. Just as the latter is held responsible for tax payer’s money, the former is answerable to stakeholders. They naturally carry the burden of reputational risk for the organisation they represent and shareholder value will continue to erode till uncertainty looms, either around their own actions or their future with the company. 

 

That is why the Board expressing support for the CEO when multiple agencies are kicking off investigations is premature and irresponsible. That is why Chanda Kochhar should have resigned or been asked to step down by now."

 

Six months have gone by since we wrote this and the worst faced by the CEO has been a leave of absence. Now there are noises around the Bank entering a "consent settlement" arrangement with SEBI, with the regulator dropping charges in exchange for certain financial penalties and restrictions. ICICI Bank share price, range bound till end of July, has since gone up by 16%. At least the investors have moved on. Maybe we should too.

 

On this cynical note, presenting today's Top 6 Business stories through our End Of Day Wrap Up

 

INDIA

 

ICICI Bank opens talks with SEBI to settle case over regulatory lapses.

ICICI Bank looks to resolve its case over regulatory lapses involving MD & CEO Chanda Kochhar, Videocon Group and NuPower Renewables through consent mechanism, under which the involved entities drop the charges subject to certain fees and restrictions.

 

Govt Committee recommends independent Payments regulator.

An inter-departmental committee set up to reform India’s Payment laws has recommended an independent Payments regulator, outside RBI. The committee recommended that this independent body be separated from RBI’s central banking and monetary policy management functions.

 

Steel Ministry proposes higher import duty on steel to protect Rupee.

The Ministry has proposed import duty to be raised to 15% on some steel products from a bracket of 5%-12.5%. This is part of the Government’s plan to reduce non-necessary imports to cut down the outflow of dollars. Accompanying this, the Trade Ministry has also recommended reduction of imports of gold and electronic goods.

 

Cyril Amarchand Mangaldas under CBI scrutiny in PNB fraud case.

India’s largest law firm has been brought under the scanner of the probe agency when documents pertaining to Nirav Modi’s diamond firms were seized from their offices in Mumbai towards the end of February. CAM declined to comment on the law firm’s relationship with the diamond merchant.

 

US/INTERNATIONAL

 

Visa and Mastercard to pay $5.54bn-$6.24bn, to over 12mn merchants.

Visa and Mastercard settled their long running feud with US retailers by paying $6.2 billion, making it the largest ever class-action settlement of a US antitrust case. The lawsuit came about with the merchants’ claims that Visa and Mastercard violated antitrust laws and fixed their swipe fees for the benefit of partner banks.

 

China retaliates with tariffs on $60 billion worth of US goods.

In a counter move, China has imposed tariffs on a list of almost 5,000 US produced goods ranging from wheat, frozen vegetables to textiles, the rate of which will vary from 5 to 10 percent. Tariffs of both countries will come into effect on September 24

 

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