HDFC Bank shares slump over 5% after chairman exits citing ‘values and ethics’ concerns

Shares of HDFC Bank fell sharply on Thursday, extending losses from pre-open trade after the lender’s part-time chairman Atanu Chakraborty resigned, citing differences over “values and ethics”.

The stock was down 4.80 per cent at Rs 802.50 on the BSE Sensex and 5.02 per cent at Rs 800.75 on the Nifty 50 as of 9:38 am, making it one of the worst performers among benchmark constituents and a key drag on the broader market.

Leadership exit rattles investor confidence

The sell-off follows the bank’s late Wednesday announcement that Chakraborty had stepped down, flagging concerns about internal practices.

In his resignation letter, Chakraborty said “certain happenings and practices within the bank” over the past two years were not aligned with his personal values and ethics, though he did not elaborate further.

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The development triggered a sharp negative reaction in global markets as well, with the lender’s US-listed shares falling about 7 per cent after the news.

Interim leadership in place

The bank has appointed veteran insider Keki Mistry as interim part-time chairman for a three-month period, with approval from the Reserve Bank of India.

Market participants interpreted the swift appointment of a long-time group insider as a move to ensure continuity and limit governance concerns, though the abrupt exit still weighed on sentiment.

Overhang of merger integration

Chakraborty’s departure also comes at a time when the bank is still integrating its merger with HDFC Ltd, a $40 billion deal that created a financial services giant.

In his resignation note, he acknowledged that the benefits of the merger were “yet to fully fructify”, suggesting ongoing operational and strategic challenges.

The merger, completed in 2022, significantly expanded the bank’s balance sheet and retail lending footprint, but also brought integration complexities that investors continue to monitor.

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Stock under pressure amid broader sell-off

Thursday’s decline adds to pressure on the stock, which had already closed marginally lower in the previous session before the news broke. The sharp fall in HDFC Bank shares exacerbated losses in benchmark indices, given its heavy weighting.

The broader market was also under stress due to global factors, including rising oil prices and a hawkish US Federal Reserve stance, but HDFC Bank’s decline stood out as stock-specific weakness.