Yes Bank Looks To Raise An Additional Rs 5,000 Crore
Yes Bank Ltd. approved a plan to raise an additional Rs 5,000 crore less than a month after the beleaguered private lender received Rs 10,000 crore from a consortium led by State Bank of India in rescue plan prepared by the banking regulator.
The private bank’s newly constituted board led by non-executive Chairman Sunil Mehta won’t be required to seek shareholder approval for this fundraising separately if conducted through a rights issue, the lender said in an exchange filing.
The bank’s board and shareholders had on Jan. 10 and Feb. 7, respectively, approved a plan to raise Rs 10,000 crore in one or more tranches through a qualified institutional placement, public issue, global and American depository receipts, foreign currency convertible bonds or any other permissible mode.
But it failed to raise funds and as its financial position deteriorated significantly, the government placed it under a month-long moratorium on March 5, the Reserve Bank of India superseded its board, capped withdrawals at Rs 50,000, and named Prashant Kumar as its administrator. The RBI then planned a rescue, and SBI, ICICI Bank Ltd,, Axis Bank Ltd., Kotak Mahindra Bank Ltd., Federal Bank Ltd., Bandhan Bank Ltd., IDFC First Bank and Housing Development Finance Corporation Ltd. invested Rs 10,000 crore cumulatively.
The moratorium was lifted on March 18 and Kumar was appointed as managing director and chief executive officer for a year. SBI was allowed to name two members on the board.
The bank used the Rs 10,000 crore invested by the consortium to mostly to meet regulatory capital limits after its buffer fell because of large provisions against bad loans. About 80 percent of the funds raised through the current process will be used as growth capital, Kumar had told reporters earlier this month.
In the October-December quarter, Yes Bank reported a net loss of Rs 18,564 crore and a capital adequacy ratio of 4.2 percent. Common equity Tier-1 capital fell to 0.6 percent at the end of the third quarter from 8.7 percent in July-September 2019.
Its gross non-performing assets rose to more than Rs 40,000 crore, or 18.87 percent of its gross advances, in the third quarter. Loans fell to Rs 1.86 lakh crore and deposits declined to Rs 1.65 lakh crore. The deposit outflow did not stop there. By March 5, the deposits had fallen to Rs 1.37 lakh crore.
According to Kumar, the bank has not seen any major deposit withdrawals since the onset of the moratorium. Only about a third of the depositors who were eligible to withdraw up to Rs 50,000 did so.