Yes Bank is planning to raise between $150-$200 million in tier I and tier II capital within the next six months.
Rana Kapoor, MD and CEO, Yes Bank, said,"We will be raising between $150 and $200 million by March 2007. As of now we plan to raise $50 million in tier II capital through debt instruments, and about $100 million in tier I capital through new issuance of primary capital, private placement, QIP or GDR, the instrument is yet to be finalised."
The three-year old, private sector lender bank says it is looking at expanding rapidly and growing its reach and thus now needs the funds to do so.
Adds Rana, "Every quarter we are growing by 25 per cent to 30 per cent as compared to the previous quarter. We are at that stage of growth where we need capital in the next six months and we have to plan for it now. We need capital basically to shore up our capital adequacy requirements and further increase our single borrower and group limits."
While at present the bank has 21 branches across 18 locations in the country, Kapoor adds that the bank has got a nod from the RBI to set up 30 more branches. "We are in the process of building additional 30 branches, and 75 ATM centers for which we got approvals recently. We also plan to increase headcount by almost double, from the present 627 to about 1,500. So a lot of capex is coming up, and we need money to invest in all this."
According to June-end (2006) numbers, the bank's capital adequacy ratio, CAR, was at 14.3 per cent and Kapoor claims that the bank would want to maintain that, and in fact try and keep CAR in excess of 12 per cent.
Meanwhile, Yes Bank says it is also mulling over the idea of foraying into the retail broking segment, as it is a lucrative revenue source. The bank plans to start a unit by FY08.
Kapoor says, "Almost every bank is looking at retail broking as a product. All private sector banks have retail broking platforms and this creates a lot more stickiness in terms of customers, more free income, more depository participant utilization. So it is definitely a good revenue source."
Other private sector banks like Kotak Mahindra, ICICI Bank and HDFC Bank are already into retail broking in a big way. Yes Bank wants to enter such services and add more customer base on the retail level.