Yes Bank bailout not good for minority shareholders: ICICI Direct

A bailout package for Yes Bank could involves bringing in fresh equity at extremely beaten down value by the fresh buyer. Accordingly, minority shareholders will be reduced to a very small percentage stake from current large position. In all cases, minority shareholders are set to lose and recommend that existing shareholders exit positions, according to researchers at ICICI Direct.

The Reserve Bank of India (RBI) has placed a temporary moratorium on Yes Bank for a month till April 3, 2020 and restricted withdrawal to Rs 50,000 per customer from deposits. The extreme step of moratorium by the RBI does indicate the pressing need of the bank for capital and liquidity. According to RBI, discussions with Yes Bank were on for months but nothing could materialise on fund raising. Hence, the action was well considered after assessing the situation. The restoration will be done swiftly within the 30-day time frame to finalise the bailout plan as per RBI Governor.

Absolute GNPA and NNPA for Yes Bank were at Rs 17134 crore and Rs 9757 crore, respectively. Its GNPA already surged 238 bps QoQ in Q2 to 7.39 per cent while NNPA ratio had surged 144 bps QoQ to 4.35 per cent.

As on September 2019, Yes Bank’s advances & deposits were at Rs 224381.9 crore and Rs 209422.8 crore, respectively. CASA for Q2FY20 came in at 30.8 per cent

SBI board has approved exploring buying some stake in Yes Bank. SBI’s former DMD and CFO Prashant Kumar has been appointed as administrator by RBI as it supersedes the board of the bank.