Yes Bank’s Rs 15,000 crore FPO adequate for capital needs for 2 years; issue opens July 15

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July 13, 2020 5:03 PM

Yes Bank share price ended 13.33 per cent lower at Rs 22.10 apiece, as compared to a 0.27 per cent rise in Sensex. Yes Bank FPO will open on July 15 and close on July 17

Yes Bank share price, yes bank fpoState Bank of India, which holds 49 per cent of the bank at present, has approved infusion of up to Rs 1,760 crore in Yes Bank’s FPO

Private sector lender Yes Bank on Monday said the Rs 15,000 crore fundraising via further purchase offer (FPO) will meet the needs of growth requirements for two years by taking capital buffers to over 5 percentage points over the regulatory obligation. Yes Bank’s newly appointed chief executive and managing director Prashant Kumar said that the private bank is also looking at manpower rationalisation to save costs, according to PTI. He also added that up to one percentage point of capital may be required to provision the possible reverses due to the coronavirus pandemic situation. Yes Bank FPO will open on July 15 and close on July 17, according to the red herring prospectus (RHP) filed by the bank.

Yes Bank is aiming to raise the money by selling its shares at Rs 12-13 apiece to raise the capital. State Bank of India (SBI), which holds 49 per cent of the bank at present, has approved infusion of up to Rs 1,760 crore in Yes Bank’s FPO. Kumar explained the rationale behind choosing the follow-on public offer (FPO) route and said that it was the only one offering the flexibility to offer shares at a reduced price. “The common equity tier-1 (CET-1) capital will go from 6.3 per cent to almost 13 per cent. It will take care of the growth requirement for two years. In addition to the capital, we also have comfort of 2.50 per cent in deferred tax assets and are not including recoveries; 13 per cent CET also is 5 percentage points over regulatory requirements,” Kumar said.

Having amassed a stressed asset pool of Rs 50,000 crore, the Yes bank is looking at hiving it off into a separate subsidiary which will be jointly run with the help of investors, Kumar said. He further added saying that at present, there is a dedicated 100-member team tasked with recoveries and resolution. From a long-term perspective, the bank is looking at ‘manpower rationalisation’ to reduce its costs. During March this, under Yes Bank restructuring scheme, all the employees have been assured that they will continue to be in the job for one year.

Yes Bank share price tumbled nearly 17 per cent to Rs 21.20 apiece in intraday trade today. The stock ended 13.33 per cent lower at Rs 22.10 apiece, as compared to a 0.27 per cent rise in the benchmark S&P BSE Sensex. The Reserve Bank of India placed the private lender under moratorium in March this year, following which Yes Bank stock price tanked to 5.55 per cent. It received Rs 10,000 crore bailout led by State Bank of India (SBI) and other lenders. Besides, according to the different disclosures made to the stock exchanges, Anil Ambani-led Reliance Infrastructure has defaulted seven times since February 1, 2020, in making payments for loans given by Yes Bank.

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