Date:25/02/2006 URL: http://www.thehindubusinessline.com/2006/02/25/stories/2006022504030100.htm

Back BhOB board not to renew CEO contract — IPO scam cited as reason behind it

Sarbajeet K. Sen

New Delhi , Feb. 24

The board of directors of the Chennai-based Bharat Overseas Bank Ltd (BhOB) has decided not to renew the contract of its Chairman and Chief Executive Officer (CEO), Mr G. Krishna Murthy. His tenure is due to come to an end in April.

Highly-placed banking industry sources said that the move to bring Mr Krishna Murthy's tenure to a premature end was due to the bank's heavy involvement in the recent scam in the IPOs of IDFC Ltd and Yes Bank Ltd.

"The board of directors of BhOB has decided not to renew the contract of the Chairman and CEO," a top banking industry source told Business Line. Asked whether the move had any link with the bank's involvement in the IPO scam, the answer was in the affirmative.

BhOB was one among several public and private sector banks in whose branches certain devious investors had opened multiple accounts running into several thousands with the purpose of cornering IPO allotments. After cornering shares from the retail portion through these benami accounts, the investors had made a killing by selling them at a premium soon after allotment.

The bank's board has representatives from its seven institutional shareholders. While Indian Overseas Bank owns 30 per cent of in BhOB, the other shareholders are Bank of Rajasthan (16 per cent), Vysya Bank (14.66 per cent), Federal Bank (10.67 per cent), Karur Vysya Bank (10 per cent), South Indian Bank (10 per cent) and Karnataka Bank (8.67 per cent).

Mr Krishna Murthy's ouster comes at a time when moves are afoot to merge BhOB with its principal promoter, IOB. Incidentally, BhOB was set up in 1973 to take over IOB's Bangkok branch, which it still retains besides having another 80 branches within the country.