The UTI Bank board has decided to split the post of chairman and managing director after a marathon meeting lasting over 5 hours till 9.30 pm on Wednesday.

The bank will now be an ex-officio chairman and a full-time managing director. The current chairman and managing director of the bank, P J Nayak, was offered the managing director's post by the board, but he declined to accept the position.

Nayak's five-year term expires on December 30, 2004.

A senior UTI Bank official was flummoxed by the development. "We are unable to understand the need for this split. We were doing very well under the previous model," he said.

Mutual fund major UTI-I, which is the majority stakeholder in the bank, will now have to nominate both the chairman and the managing director by December 30.  Banking sources said one of the promoters mooted this idea at the meeting today "though the reason couldn't have been performance".

Nayak was seen as "too strong" a personality to hold the top post, the source added.

Nayak has been credited for bringing UTI Bank out of the woods. During his stint he has improved the asset quality of the bank and repositioned it with a new emphasis on retail sector. The bank has been growing at a steady 30 per cent quarter on quarter.

Prior to his appointment at UTI Bank as chairman and managing director on January 1, 2000, Nayak was the executive trustee of Unit Trust of India.

An Indian Administrative Service cadre Nayak joined UTI in 1996. Between 1990-95 he worked as Joint Secretary, Department of Economic Affairs, Ministry of Finance, Government of India.

UTI Bank is the only Indian bank being chased by two UK financial heavy weights -- HSBC and Barclays Capital. The bank was in the limelight early this year when HSBC attempted to purchase over 20 per cent stake in the bank.

Reserve Bank of India finally gave the UK bank permission to purchase only 14.6 per cent. Barclays Capital holds 4.5 per cent stake in the bank.