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SBI sees Yes Bank revival

Yes Bank has been facing difficulties in raising capital
Kumar’s comments come amid speculation that the country’s largest bank may be asked to bail out the private sector lender

Our Special Correspondent   |   Mumbai   |   Published 23.01.20, 07:46 PM

State Bank of India (SBI) chairman Rajnish Kumar on Thursday said “some solutions will emerge” to stabilise Yes Bank, which has been facing difficulties in raising capital.

Kumar’s comments come amid speculation that the country’s largest bank may be asked to bail out the private sector lender. The SBI chief had earlier ruled out such a possibility.

Speaking to a television channel in Davos, Kumar said Yes Bank was a major player in the market with a $40-billion balancesheet and it will not be allowed to “fail”.

The SBI chairman’s comments sent the shares of Yes Bank surging on the bourses. On the BSE, the scrip settled with gains of 6.50 per cent, or Rs 2.50, to close at Rs 40.95. In intra-day trade, the counter hit a day’s high of Rs 41.35 — a gain of 7.54 per cent.

Yes Bank had recently slashed its capital raising plan. The lender had earlier announced that it intends to mobilise $2 billion for which it has received offers from institutional investors and family offices. This has been brought down to Rs 10,000 crore for which it will seek shareholders’ approval at an extraordinary general meeting (EGM) to be held on February 7.

Yes Bank had also allayed concerns over reports of its weakening financial health when it said its capital adequacy was at a comfortable level and efforts were being made to further strengthen it.

“The bank’s overall capital adequacy ratio is comfortably above regulatory requirements and all efforts are being made to financially strengthen the bank even further. Kindly, therefore, pay no heed to these unfounded reports,” the bank had said in the statement.

In its EGM notice, Yes Bank said that the proposal to raise up to Rs 10,000 crore was expected to provide the necessary platform to meet the growing requirements of its expanding business.

The lender added that the higher capital also provided the buffer required to absorb higher provisioning requirements during asset quality cycles.

According to the bank, given its current market share of 2.3 per cent of the advances as on September 30, 2019, it envisages significant lending opportunities.

The bank may raise capital via the issue of equity shares through qualified institutional placement, ADRs/GDRs or foreign currency convertible bonds.

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