Two days after abrupt resignation of part-time chairman Atanu Chakraborty, axe falls on three HDFC Bank executives due to alleged involvement in mis-selling of AT-1 bonds of Credit Suisse to customers at Dubai branch.
Two days after the abrupt resignation of part-time chairman Atanu Chakraborty, heads have started rolling at HDFC Bank.
The axe has fallen on three of the bank’s executives due to their alleged involvement in mis-selling of additional tier-1 (AT-1) bonds of Credit Suisse to retail customers at the Dubai branch.
The names in the list include Sampath Kumar, group head of branch banking, Payal Mandhyan, senior vice president and Harsh Gupta, executive vice president, Middle East, Africa and NRI onshore business, sources said.
“The bank identified certain gaps in client-onboarding requirements at its DIFC branch in the UAE and has completed a detailed and objective review of the matter. Appropriate remedial actions have been taken in line with internal policies. Personnel changes have been undertaken along with appropriate action as per the bank’s conduct regulation,” the lender said.
The AT-I bonds of Credit Suisse were marketed to non-resident Indians (NRIs) as “safe-haven” investments to high net-worth individuals without providing a clear picture. Some investors complained that they were promised returns of 12-13% without being made aware of the high risks.
In March 2023, Swiss regulator FINMA ordered the entire write-off of these bonds worth about $17 billion after Credit Suisse went bankrupt and was taken over by another banking giant, UBS.
AT-1 bonds are different from other regular bonds in that they have no maturity date and can be written off or converted into equity if the bank faces financial stress.
The action by HDFC Bank against its three executives comes in this background. Its DIFC branch was embroiled in the issue over Credit Suisse AT-1 bonds and investors claimed the bank had mis-sold these bonds.
In September last year, the Dubai Financial Services Authority (DFSA) banned the HDFC Bank branch at Dubai International Financial Centre (DIFC) from onboarding new customers citing deficiencies in its procedures. The restriction covered activities such as advising on financial products, arranging deals in investments, arranging credit, advising on credit and arranging custody.
