SHANGHAI (Reuters) -- China Merchants Bank (CMB) shares slumped on Tuesday, as investors took fright after the lender announced the sudden removal of its president.
China's third biggest lender by market value issued a statement late on Monday saying that the board agreed "on the removal" of Tian Huiyu from his role as president, and that Wang Liang, vice president and chief financial officer, would take over responsibilities.
Tian did not attend the meeting for a "personal reason" and he was "subject to further assignment," the statement said.
China Merchants Bank's Hong Kong-listed shares, which resumed trading on Tuesday after a public holiday, plunged 11.5%, while its Shanghai-traded shares slipped 3%, following the previous session's 7.3% tumble.
The official Securities Times newspaper reported on Tuesday that Tian will become vice chairman of the China Merchants Financial Group. The group was not immediately reachable for comment.
"With the uncertainties brought on by the change of top management regarding CMB's future strategy as well as the premium valuation the stock is seeing relative to peers', we expect some volatility in the stock near term," Morgan Stanley said in a note on Tuesday.
But the actual impact on the core operating results could be small, Morgan Stanley added, citing the bank's stable operating trend and a thick financial buffer to cushion uncertainty.
CLSA expected the news of the loss of a "key man" to negatively affect the bank's share prices in the short term, but reckoned the risks were overstated.
Tian has spearheaded CMB's strategic transformation since 2013, CLSA said.
But, it said, the bank has established a "sound corporate governance framework and prudent risk management culture in its 35-year history, which are unlikely to alter due to management change."
That view was echoed by Guotai Junan Securities, which saw no material impact from the change at the top.
"We expect the company's earnings to still grow a relatively fast pace in 2022," it said.