Shares of Yes Bank crashed 34%, their steepest pct plunge since January 2008, in opening deals on Friday after the term of CEO Rana Kapoor was cut short on Wednesday.
Shares of Yes Bank crashed 34%, their steepest percentage plunge since January 2008, in opening deals on Friday after the term of CEO Rana Kapoor was cut short on Wednesday. The shares of the bank tanked to Rs 210 to a two-year low after the market opened on Friday after one day holiday. However, the shares recovered to Rs 260.60 soon.
Following the massive plunge in the share prices, Yes Bank lost Rs 25,057 crore in the market capitalisation on Friday. At the day’s low share price of Rs 210.1 on BSE, Yes Bank held a market cap of Rs 48,457 crore whereas according to Wednesday’s closing price Rs 318.5, Yes Bank market capitalisation was at Rs 73,514 crore. At the time of writing, Yes Bank market capitalisation was at Rs 59,111 crore.
The Reserve Bank of India has trimmed the term of founding CEO Rana Kapoor to January 31, 2019. Rana Kapoor is 61. The central bank has asked the bank to look for his replacement by January 2019.
“Reserve Bank of India has vide letter dated September 17, 2018 received today, intimated that Shri Rana Kapoor may continue as the MD & CEO till 31 January 2019, and the Board of Directors of the Bank are scheduled to meet on September 25, 2018 to decide on the future course of action,” Yes Bank said in a statement.
Rana Kapoor has been the MD and CEO of the bank since it was founded in 2004. He had sought three-year extension till August 2021. However, the RBI refused to grant the extension of 3 years and gave time until January to find his replacement. In June, Yes Bank shareholders had approved the re-appointment of Rana Kapoor for three years.
Reacting to the crash, Macquarie said that stock performance critically hinges on answers to questions such as what exactly was the discomfort with Kapoor, who will be the new MD, will RBI allow Kapoor to continue on the board and what will happen to the planned $1 bln qualified institutional placement (QIP) at year-end, among others.
Rana Kapoor was part of the founding team of Yes Bank, along with Ashok Kapur who died in 2008. As a promoter, Rana Kapoor and his family own 10.66 per cent stake in the bank and are the biggest investor in the bank.