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The ₹15,000-crore capital-raise from the follow-on public offer (FPO) will take care of the growth requirements of YES Bank for the next two years, its Managing Director and CEO Prashant Kumar said.
“The CET 1 ratio will increase from 6.3 per cent to 13 per cent,” he told reporters on Monday ahead of the FPO.
On the impact of the current economic slowdown, Kumar said the bank may not require more than 100 bps of additional provisioning for the Covid-19-led stress as it has already made adequate provisioning earlier.
Noting that over the last 12 months, YES Bank had to de-grow its balance sheet, Anurag Adlakha, Group CFO, said the capital-raise will open the doors for further growth.
YES Bank’s FPO will open on July 15 and close on July 17. State Bank of India, which already has a 48.2 per cent stake in YES Bank, has announced it will invest up to ₹1,760 crore in the FPO.
The anchor investor issue size is fixed at ₹4,500 crore, which is scheduled for July 14.
Kumar said the private sector lender has already received “very good interest” from foreign institutional investors (FPIs).
The FPO will help diversify the bank’s investor base, he said, as a large number of new and existing users can participate. Significantly, there will be no restrictions on investors who participate in the forthcoming issue in terms of a lock-in of shares.
Spelling out the private sector lender’s strategy ahead, Kumar said it hopes to grow its retail and MSME book and will target a growth of 20 per cent in the segment. Meanwhile, in the corporate sector, it will follow an asset-light model and focus on transaction banking, digital solutions, CASA liability and non-fund requirements. There will be lending to the lower end of the corporates.
Deposit mobilisation will also be a key focus area for the private sector lender, Kumar said. YES Bank’s deposit base was down 54 per cent to ₹1.05-lakh crore as on March 31, 2020 from ₹2.27-lakh crore a year ago.
The bank is also exploring the option of hiving off its bad loans into a separate organisation, subject to regulatory approvals, Kumar said. It will have investors and will be run professionally.
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