Yes Bank’s Promoter Groups Divided Over “Truce”
The sparring promoters of Yes Bank are inching towards a truce, but there was no clarity over the exact status of the talks.
Sparring promoters of Yes Bank are inching towards a truce, but there was no clarity late on Tuesday over the exact status of the talks with one camp claiming it's at an advanced stage and the other being not on the same page.
The Rana Kapoor camp said settlement talks are at an "advanced stage" with the draft consent terms under discussion which speaks of recognising both the groups as "equals", while the Madhu Kapur family maintaining that the “discussions are still on”.
It is an over five-year-old battle and it will take time for a consensus to emerge, sources close to the Madhu Kapur family told PTI on Tuesday.
Rana Kapoor, the managing director and chief executive of the bank, and the entities linked to his family own 10.7 percent in the fifth-largest private-sector bank. Madhu Kapur, the widow of the founder chairman Ashok Kapur, owns 9.8 percent.
The developments come within hours of a rating downgrade by global rating agency Moody's Investors Service citing concerns on corporate governance and a fortnight ahead of the crucial board meeting on Dec. 13, which may recommend a new chief executive officer and non-executive chairman.
According to sources close to Kapoor, whose new- three-year term was curtailed by the central bank in mid-September, progress has been made following an "exchange of notes" last Thursday with Madhu Kapur. Ten specific pointers had been exchanged, they said.
They also say the agreement will include withdrawal of counter-suits filed by both the parties against each other in the Bombay High Court. But the Madhu Kapur camp denied the development, saying the consent terms will have to be finalised first and placed before the court, following which the suits can be withdrawn.
The finer points of a possible agreement are being discussed right now in details, they said, and explained that the issue of voting at the Dec. 13 board meet can happen only if an agreement is reached by then.
The board meeting may also decide on crucial appointments, including recommending a non-executive chairman and three non-executive directors to fill the vacancies created by the resignations in recent past. If the agreement goes through, it will end a decade-old rivalry between the two promoter families which began after the tragic death of Ashok Kapur in the 26/11 attacks.
The matter reached the Bombay High Court early 2012, after Kapoor contested the eligibility of Madhu Kapur being a promoter and the court ruled in her favour. He had also removed her name from the list of promoters in the annual report for that year.
Sources say as part of the "equal rights" framework, both the parties will jointly recommend the non-executive chairman as well as the managing director and chief executive apart from nominating one board member each and a third non- executive director jointly.
The bank had last week officially admitted that the promoters were in talks for a settlement. The talks had reportedly been initiated by Kapoor himself after the Reserve Bank of India turned a second request by the board for a re-look at his continuance in the bank beyond Jan. 31.
Since mid-September, when the RBI asked Kapoor to leave the bank by the deadline, Yes Bank stock lost 55 percent of its value. In two trading days after the RBI writ, the stock tanked over 40 percent.
On Tuesday, the bank counter lost 2.55 percent to settle at Rs 183.15 on the BSE against the benchmark closing with 159 points gains. The stock is way off its 52-week high of Rs 404.25.
Kapoor was the second top executive at a private sector lender after Axis Bank's Shikha Sharma to face a the ire of the regulator and lose the job. Though no official reasons were specified for the action, both the lenders were found to have under-reported their non-performing assets by over Rs 10,000 crore each for two consecutive financial years.