India’s Biggest Lender to Invest $332 Million in Yes Bank Rescue
State Bank of India said it will immediately invest 24.5 billion rupees ($332 million) in Yes Bank.
(Bloomberg) -- State Bank of India said it will immediately invest 24.5 billion rupees ($332 million) in Yes Bank Ltd. as part of a central bank-backed rescue plan for the embattled lender.
SBI, the country’s largest bank, won’t ask the federal government for capital to fund the rescue and may instead work with other investors, Chairman Rajnish Kumar told reporters in Mumbai on Saturday. Many have approached it to be part of the deal, he said.
“Our investment is an assurance to depositors and our co-investors,” Kumar said. “We are in a comfortable position to inject funds into the bank.”
The state-owned lender, which had to step in to help rescue its weaker private counterpart, said it’s in talks with potential investors in India and overseas for a 49% stake in Yes Bank.
SBI said it’s willing to invest as much as 100 billion rupees over time in Yes Bank to keep it operational, stressing that the rescue was not a merger. SBI won’t be involved in Yes Bank’s daily operations, Kumar said.
Kumar, who had said a few months ago that there was no question of a bailout of Yes Bank by SBI, said on Saturday that being the nation’s largest bank, it had to try to prevent an important lender from going down.
“You need a credible name with the investors to save a bank,” he said. “SBI is a credible institution with size.”
Kumar sought to reassure Yes Bank’s depositors that their money was “not at all at risk” and that SBI’s investment was not against its own shareholders’ interests. SBI has made a minimum commitment to own 26% in Yes Bank, Kumar said.
SBI’s planned investment comes after the Reserve Bank of India decided to seize Yes Bank when it noticed a surge in withdrawals by depositors, people with knowledge of the matter said on Friday. The latest announcements help answer some questions, including the fate of depositors, creditors and shareholders, that had unnerved markets.
To contact the reporters on this story: Suvashree Ghosh in Mumbai at sghosh186@bloomberg.net;Archana Chaudhary in New Delhi at achaudhary2@bloomberg.net
To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Margo Towie
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