SBI-led consortium to take over cash-strapped Yes Bank: Report

A consortium led by the State Bank of India (SBI) has been granted the requisite government permission to take over cash-strapped Yes Bank, reports said on Thursday (March 5). An announcement is this regard is likely to be made soon.

The board of SBI, the country’s largest lender, met in Mumbai on Thursday, but it could not be immediately ascertained whether takeover of Yes Bank is on the agenda, reported news agency PTI.

Yes Bank, which is grappling with bad loans, is looking to raise fresh capital but the plans are facing uncertainties. It has also delayed announcement of 2019 December 2019 quarter results due to the ongoing crisis. The bank’s capital buffers have come down due to non-performing assets.

Analysts are of the opinion that capital infusion in Yes Bank is a bad idea. SBI’s consortium idea is good as it would be disastrous to merge Yes Bank with SBI, given the latter’s poor asset quality, according to them.

Over the past one year, shares of Yes Bank have nosedived a whopping 88 per cent against over 2 per cent rise in the benchmark Nifty50 index.

Sources said the government has cleared a plan for a SBI-led consortium to acquire a controlling stake in the bank. In a clarification to stock exchanges on reports that the government is said to have approved SBI’s plan to buy stake in Yes Bank, the state-owned lender said it would disclose developments, if any, as per Sebi regulations.

“We will abide by the timelines under Regulation 30 of Sebi (LODR) Regulations 2015 in disclosing the developments, if any in the matter to stock exchanges,” it added.

Yes Bank said it would like to clarify that as on date, the bank has not received any such communication from RBI or any other government or regulatory authorities or from the SBI.

“We are unaware of any such decision. Therefore, we are not in a position to comment on such news item,” Yes Bank said in a filing to the stock exchanges.

The bourses had sought clarification the reports.

Further, Yes Bank said in the usual and ordinary course of its business continues to explore various means of raising capital/ funds through issuance of securities to diverse set of investors to meet its business or regulatory requirements.

The bank also said that it would keep stock exchanges updated on disclosures required to be made under Sebi regulations.

Yes Bank has been passing through a tumultuous period ever since the Reserve Bank, in August 2018, asked the then chief executive Rana Kapoor to leave by January 31, 2019, amid concerns on governance and loan practices. Under his successor Ravneet Gill, the lender has disclosed large under-reported stressed assets.

The bank reported its maiden loss in the March 2019 quarter. Yes Bank had initially planned to raise capital of over $2 billion in the current fiscal. Later, its board rejected a $1.2 billion investment in the bank by Canadian investor SPGP Group/Erwin Singh Braich.

Mumbai-headquartered Yes Bank was incorporated in 2004. The bank’s asset size stood at ₹3,71,160 crore at the end of June 2019.

Promoters of Yes Bank — Madhu Kapur, Yes Capital (India) Pvt Ltd and Mags Finvest — hold 8.33 per cent stake in the crisis-ridden bank, as per data available on the stock exchanges. The bank’s co-founder Rana Kapoor has sold his entire stake in the bank.

Besides, foreign portfolio investors hold 15.17 per cent stake, state-owned LIC has 8.06 per cent, and mutual funds own 5.09 per cent. Shares of Yes Bank jumped nearly 26 per cent to ₹36.85 apiece in late afternoon trade on the BSE.

(With inputs from agencies)