HSBC, StanChart in race for YES stake

Written by Hemang Palan | Mumbai, Feb 25 | Updated: Feb 26 2008, 06:27am hrs
At least two of the worlds top five banks have evinced interest in picking up a stake in YES Bank, a fast-growing private sector bank.

Rana Kapoor, founder, managing director and the CEO of YES Bank, said: In the last one year, some of the leading foreign banks have approached us with a proposal to invest up to 5% stake in our bank. Few of these players have an established presence in India.

A large foreign bank eyeing an entry or planning for an expansion in India will obviously prefer to invest in YES Bank, Kapoor said.

Kapoor did not confirm the names of the bank, but sources familiar with the issue said HSBC and Standard Chartered are front-runners for buying stake in YES Bank.

Although we welcome equity investment from leading foreign banks, we would like to nurture an associate relationship with them initially. It would be wise for us to offload up to 40% of our shares in their favour after 2009, provided the regulator allows us, Kapoor said.

Kapoor said, by inviting equity participation of foreign banks, his bank would stand to gain a global footprint in the immediate future.

Otherwise, getting licences for YES Bank to open branches in overseas destinations like New York, London, Hong Kong, Dubai, Tokyo and Singapore could take as long as 5 to 10 years. However, in no case would we like to give away the banks management control, Kapoor added.

The proposed equity funding could fuel YES Banks plan to roll out more branches in the feeder cities of India, investing over Rs 350 crore by 2010. YES Bank has set a target of a 117-branch network in the next six months, and by 2010, there would be around 250 branches, Kapoor said.