Yes Bank's promoter groups yet to find common ground
28 November 2018
Talks between warring promoters of Yes Bank looks set to hit a deadlock after reports that the Rana Kapoor camp had to shell off Rs400 crore to pay off two mutual funds, even as the office of the managing director and chief executive of the bank saying that settlement talks are at an "advanced stage."
However, there was no clarity 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. It now seems the battle between the two promoter groups will not end so soon as more time may be needed for a consensus to emerge.
The Rana Kapoor camp said as per draft consent terms under discussion both the groups will be treated as "equals", while the Madhu Kapur family maintained that “discussions are still on”.
Rana Kapoor and the entities linked to his family own 10.7 per cent in Yes Bank, while Madhu Kapur, widow of the founder chairman Ashok Kapur, owns 9.8 per cent in the bank.
Entities linked to Rana Kapoor, the chief executive of Yes Bank, are reported to have paid Rs400 crore to two mutual funds from whom they had raised funds by pledging shares.
The Kapoor family paid Rs200 crore each to Reliance Mutual Fund and Franklin Templeton Mutual Fund, reports said, adding this was a prepayment of the due amount.
With the share price of the bank more than halving after the Reserve Bank of India curtailed Rana Kapoor’s tenure as MD & CEO to 31 January 2019, mutual funds became apprehensive of losing money since the shares were the primary security against which the loans were given.
With this payment, the overall outstanding of the promoter group’s borrowing has come down to Rs1,400 crore, reports said.
Kapoor invited regulatory ire after the bank underreported NPAs worth more than Rs10,000 crore in FY16 and FY17.
The overall security cover is valued at Rs5,000 crore at the current stock price, which is over three times the outstanding, the people claimed — though it is not exactly known at what price the shares were trading, when they were pledged or when the money was raised.
Kapoor had said he did not intend to sell his holding in the bank, even after he leaves the bank.
The promoter group entities are understood to have borrowed by pledging shares for investing in other ventures and have paid off once the adequate liquidity was available, they said.
On Monday, global rating agency Moody's Investors Service downgraded Yes Bank’s rating citing concerns on corporate governance. The rating downgrade comes a fortnight ahead of the crucial board meeting on 13 December, which may recommend a new chief executive officer and non-executive chairman for Yes Bank.
On Monday, Yes Bank shares fell 3.9 per cent to Rs187.95 on the BSE while the benchmark Sensex rose 1.07 per cent.