SBI board OKs Yes Bank share purchase; approval secured for up to triple the initial investment

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Updated: Mar 12, 2020 5:14 PM

State Bank of India’s Executive Committee of Central Board (ECCB) has given an approval to purchase up to 725 crore shares in the troubled private sector lender Yes Bank, allowing for up to triple of the initially planned investment.

In a filing to the stock exchanges, SBI reiterated that its equity stake in Yes Bank will remain within 49 per cent of the private sector bank’s paid up capital.

State Bank of India’s Executive Committee of Central Board (ECCB) has given an approval to purchase up to 725 crore shares in the troubled private sector lender Yes Bank, allowing for up to triple of the initially planned investment. SBI’s board committee has approved Yes Bank share purchase at Rs 10 per share, aggregating to Rs 7,250 crore, which is nearly triple the earlier expected Rs 2,450 crore. In a filing to the stock exchanges, SBI reiterated that its equity stake in Yes Bank will remain within 49 per cent of the private sector bank’s paid up capital.

On March 6, the Reserve Bank of India (RBI) announced a reconstruction plan for the cash-starved Yes Bank. According to the plan, SBI will invest in Yes Bank for up to 49 per cent of the post-issue paid up capital. It would buy the new equity in the bank at Rs 10 per share, including Rs 8 per share premium. Yes Bank’s paid up share capital is at 255 crore shares of Rs 2 face value each. For now, SBI cannot buy more than 245 crore new shares in Yes Bank due to the 49% cap, unless Yes Bank issues fresh shares to other investors, raising its paid up capital base.

Earlier, last week, the RBI placed Yes Bank under a moratorium, limiting withdrawals for customers and superseding the board. Newly-appointed Yes Bank administrator since then reiterated many-a-times that the moratorium could be lifted as soon as by the end of this week.

According to the RBI’s draft proposal to restructure Yes Bank, the authorised share capital of the lender has been altered to Rs 5,000 crore; and equity shares to 2,400 crore of Rs 2 each. SBI, as per the plan, will not be allowed to bring down its holdings to less than 26 per cent before the completion of three years from the date of capital infusion.

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