Yes Bank rescue: SBI, 7 other investors to pool in over Rs12,000 cr
13 March 2020
State Bank of India along with a clutch of private banks, including ICICI bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank and investors such as Rakesh Jhunjhunwala, Radhakishan Damani and the Azim Premji Trust will pick up stakes worth over Rs12,000 crore to prop up struggling private lender Yes Bank.
These investors will together hold more than 49 per cent, with SBI holding the largest share of 45 per cent, as per the proposal sent to the Reserve Bank of India (RBI), which had drawn up a rescue plan for Yes Bank.
SBI, which has proposed to invest up to Rs7,250 crore at Rs10 per share in Yes Bank, has also recommended that the current administrator of Yes Bank, Prashant Kumar, be appointed as the new CEO of the bank.
Besides the pooling of capital, public sector banks will also bring in Rs30,000 crore as bulk deposits, as per the proposal.
While the plan has been finalised and sent to the RBI, there could still be changes in the final set of investors, reports citing officials said.
SBI announced plans to invest Rs7,250 crore in Yes Bank for a 49 per cent stake in an exchange filing on Thursday. “The executive committee of (SBI’s) central board has approved purchase of 725 crore shares in Yes Bank Ltd at a price of Rs 10 per share subject to all regulatory approvals,” SBI said in its exchange filing.
“Our shareholding in Yes Bank Ltd. will remain within 49 per cent of the paid-up capital of Yes Bank.”
Reports, meanwhile, suggested that the private sector banks could invest around Rs1,000 crore each for 5 per cent stake each while the fhigh net worth investors could contribute Rs500 crore each.
RBI, which announced a moratorium on Yes Bank and superseded its board on 5 March, had also unveiled a rescue plan for the private lender, which the central bank said would be in place within 30 days. It also appointed former SBI executive Prashant Kumar as the administrator for the bank.
Yes Bank has been struggling to find investors and raise about $3 billion needed to provide for bad assets and meet regulatory requirements.
Meanwhile, holders if Yes bank’s additional tier 1 (AT1) bonds, that include Mutual fund companies such as Nippon, Kotak and Franklin, pension funds, insurance firms besides Reliance Industries and Barclays Bank, have submitted a formal proposal to the RBI seeking conversion of the bonds into shares.
However, under RBI’s proposed rescue plan, about Rs8,500 crore of AT1 bonds are to be written down to zero.
The bondholders have warned that they may decide to move court if their proposal is not accepted.