The State Bank of India (SBI) is yet to decide on its stake in Yes Bank, where the lock-in period of its holding will end shortly.
The Reserve Bank had said SBI must hold on to its stake in Yes Bank for three years, when it approved the bank’s restructuring in March 2020.
The country’s largest bank can sell the Yes Bank shares from March 13 amid unconfirmed reports that the board would soon meet and decide to sell part of its holding in Yes Bank.
In March 2020, SBI had picked up 49 per cent in Yes Bank for an initial investment of Rs 6,050 crore as part of a rescue plan after the RBI superseded the board of Yes Bank, following serious deterioration in its financial position.
SBI’s stake subsequently fell to 26 per cent after Yes Bank came out with a follow-on public offering in 2020 and it issued fresh shares to private equity funds — Carlyle and Advent — in the third quarter of this fiscal year. At the time of restructuring, the banking regulator had said SBI will need to hold at least 26 per cent in Yes Bank for three years.
For the period ended December 31, 2022, SBI held 751.6 crore shares or 26.14 per cent of Yes Bank that are valued at Rs 12,695 crore based on Monday’s closing price.
The bank’s initial investment was valued at Rs 6,050 crore; SBI is thus sitting on a gain of almost 110 per cent.
Both Yes Bank and SBI shares on Monday closed flat at Rs 16.89 and Rs 561.65, respectively, on the BSE on a day the benchmark Sensex rose almost 416 points.
According to analysts at ICICI Direct, Yes Bank has witnessed a gradual improvement in business growth as well as asset quality in the last six quarters.
Its gross non-performing assets (GNPA) ratio fell to 2 per cent after it sold its stressed assets to JC Flower.
"Going ahead, the bank is poised to pedal higher advance growth (driven by granular retail assets) as it concluded Rs 8,900 crore of capital raise from Carlyle and Advent. Focus on growth along with margin improvement may enable the bank to improve its return on assets (RoA ) to guidance of 0.9-1 per cent in 2024- 25,’’ the brokerage said.
The near-term risk to the stock includes the decision to write-down the additional Tier-1 (AT-1) bonds, being challenged in the Supreme Court, and supply overhang after the expiry of the stock lock-in.
Apart from SBI, the other lenders to participate in YesBank’s rescue plan include Axis Bank, ICICI Bank, HDFC, Bandhan Bank, Federal Bank, IDFC First Bank and Kotak Mahindra Bank.
HDFC infused Rs 1,000 crore in Yes Bank, Axis Bank invested Rs 600 crore, whereas Kotak Mahindra Bank put in Rs 500 crore.
Bandhan Bank and Federal Bank invested Rs 300 crore each, while IDFC First Bank put Rs 2,500 crore into the bank.