HDFC Bank Shares Rise Amid Action Against More Executives

The world’s 10th largest bank by market capitalization is seeing an uptick in its stock price.

On Wednesday, the shares of the Mumbai-headquartered HDFC Bank Limited edged higher to ₹746.65, up by about 0.59% from the previous closing price of ₹742.25. Despite the gain, the stock is still down by 2.27% over the past five trading days and 15.10% over the past month.

Credit Suisse AT1 Bonds Controversy

The stock struggles to recoup its losses following the resignation of the bank’s former part-time chairman Atanu Chakraborty and the dismissal of key persons in the company.

In March, the bank sacked Sampath Kumar, group head of branch banking, Harsh Gupta, EVP for Middle East, Africa and NRI business, and Payal Mandhyan, SVP. 

This happened after the Dubai Financial Services Authority ​imposed restrictions that prevented the bank’s branch from adding new clients or offering new financial services because of the alleged mis-selling of AT1 bonds that were written off during the UBS-led bailout of Credit Suisse.

The investors who sustained losses claimed that the bank’s staff wrongfully informed them that the financial instruments are fixed-maturity products with guaranteed returns.

More Executives Penalized

According to a new report, the bank has also taken action against 12 more executives over the alleged mis-selling of the bonds.

CNBC-TV18 reported that in addition to three senior officials who were terminated last month, HDFC Bank has also penalized 12 more. Four executives, including the group head of branch banking and treasury Ashish Parthasarthy, are reportedly facing severe actions while the other eight are likely to get minor penalties.

Reason Behind Resignation

Chakraborty, who stepped down citing differences over values and ethics, admitted that the mis-selling of the bonds is among the key reasons behind his resignation.

“Something goes on for eight ​years, ⁠and suddenly we take an action,” he said. “While the issues have been addressed, there has ​been involuntary separation ​of three ⁠senior (executives) that has been reported, as well as 12 other people punished from major penalties to ​minor penalties.”