Shares of RBL Bank on Monday slumped over 22 per cent and hit a 52-week low as investors reacted negatively to the appointment of a new CEO, even as couple of brokerages flagged the possibility of an asset quality clean-up and the bank’s performance getting adversely impacted.

On Saturday, the private sector lender had announced that the Reserve Bank of India (RBI) has approved the appointment of R. Subramaniakumar as managing director and CEO for a period of three years with effect from the date of his taking charge. The RBL Bank board will hold a meeting in “due course” to approve his appointment.

Subramaniakumar is a veteran banker with 40 years of experience. His banking career began with Punjab National Bank (PNB) from 1980.

He was also the executive director at Indian Bank and Indian Overseas Bank. While he held the position of managing director and CEO of Indian Overseas Bank, he was also the administrator at Dewan Housing Finance Corporation Ltd (DHFL) and mediated its resolution.

However, the stock markets were disappointed with the appointment. The RBL Bank stock opened in the red at Rs 102.05 on the BSE and collapsed 24 per cent to hit a day’s low of Rs 86.25 — a 52-week low. It ended at Rs 87.90 on the BSE, a drop of 22.45 per cent, or Rs 25.45, over the last close.

There was media speculation earlier that Zareen Daruwala, Standard Chartered Bank India’s CEO, was one of the contenders.

Brokerage CLSA said in a report that historically such appointments at financial institutions have been associated with weak asset quality or governance and the CEO appointment raises more questions, including the continuity of the existing top leadership at the bank.

“While we believe asset quality does not seem to be a problem, this situation could have a potential weakening impact on liabilities and hence impact the bank’s performance adversely,’’ it added.