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Yes Bank: Overhang of pledged shares ends as lenders sell out

Following this deal, “the entire pledge stands extinguished”, the bank said in a statement.

Yes Bank, Yes Bank shares, BSE, Yes Bank stock price, Rana Kapoor, equity shares, MCPL
Following the sharp fall in Yes Bank’s shares over the past few months, lenders had sought more cash cover against amounts borrowed by Rana Kapoor.

Yes Bank on Wednesday said a “forced sale” of 10 crore pledged equity shares or 3.92% of the bank’s share
capital, by lenders, were primarily responsible for Tuesday’s crash in the stock price of the lender. The private lender’s stock crashed 22.8% on Tuesday to close at Rs 32 on the BSE.

Following this deal, “the entire pledge stands extinguished”, the bank said in a statement. The stakeholder in question is one of the bank’s promoters, Rana Kapoor, and the invocation of pledge on the equity shares was triggered by Reliance Nippon Life Asset Management.

Last week, FE had reported Kapoor was looking to completely exit Yes Bank with the intention to protect other unlisted entities such as the Delhi Dabang Kabaddi Club, Awfis Solutions and Art Housing Finance.

Following the sharp fall in Yes Bank’s shares over the past few months, lenders had sought more cash cover against amounts borrowed by Rana Kapoor. With Tuesday’s action, the bank said the entire pledge stands extinguished and all sale under the same duly completed.

As a further assurance to investors, the bank stated its financial and operating metrics are intrinsically sound and stable and its liquidity position in excess of regulatory requirements. Yes Bank said its liquidity coverage ratio is in excess of 125% as on September 30 2019, against the minimum regulatory requirement of 100%.

Following the statement issued by Yes Bank, Yes Capital and Morgan Credits (MCPL) also issued letters on Wednesday evening stating that the shares were pledged by Rana Kapoor to support the borrowings of MCPL, which is owned by his three daughters. The proceeds from the earlier sale of Yes Bank shares held by MCPL and YCPL were used to repay outstanding NCDs of YCPL and little over 61% outstanding NCDs of MCPL till September 30, 2019.

“The decision to divest our shares at undervalued share price levels, considerably below the book value was taken under compelling circumstances with the sole purpose deleveraging MCPL and YCPL,” the letter stated. Referring to the sale of shares on October 1, they said that the proceeds from the sale were being appropriated towards prepaying the balance outstanding NCDs of MCPL subscribed by RNAM, thus, bringing the leverage down to negligible levels. The total prepayments (including accrued interest) to RNAM by MCPL amount to approximately Rs 1,145 crore well before due date of April 2021.

It further stated its gross advances totalled approximately Rs 2.32 lakh crore as on September 30, 2019, with a higher share of retail advances compared with Rs 2.42 lakh crore as on June 30, 2019. Yes Bank’s deposits aggregated approximately Rs 2.09 lakh crore as on September 30, 2019, while its CASA (current account savings account) ratio has improved to around 30.8% against 30.2% in the previous quarter. The availability of information related to the September quarter ahead of the official results announcement was subject to approval by the audit committee of the board, the board of directors and review by the statutory auditors of the bank, it stated

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