Yes Bank case: ED attaches Rana Kapoor's Rs 127 cr London flat under PMLA

 The Enforcement Directorate (ED) has attached a Rs 127-crore flat of Yes Bank co-promoter Rana Kapoor in London in connection with a money laundering investigation against him and others, the central agency said on Friday.

The agency issued a provisional order for attaching the property -- Apartment1, 77 South Audley Street, London -- under the Prevention of Money Laundering Act (PMLA).

"The market value of the flat is 13.5 million pound (about Rs 127 crore). The property was purchased by Rana Kapoor in 2017 for 9.9 million pound (Rs 93 crore) in the name of DOIT Creations Jersey Limited and he is the beneficial owner," the ED said in a statement.

It claimed that the agency obtained "information from a reliable source that Kapoor was trying to alienate this property in London and that he has hired a reputed property consultant."

"Enquiries from open sources confirmed that this property has been listed for sale on several websites," it said.

The agency, as per procedure, will now approach their counterparts in the United Kingdom to execute the attachment order and will issue a proclamation that the asset cannot be sold or purchased as it has been seized under the criminal sections of the PMLA.

The ED has earlier attached assets in the US, Dubai and Australia in a similar fashion as part of other investigations under the PMLA.

The ED had booked Kapoor, his family members and others under the PMLA after studying a CBI FIR that alleged that dubious multi-crore loans were given by Yes Bank to various entities in contravention of the law and in lieu of purported kickbacks given to the Kapoor family.

The CBI FIR had stated that during April-June, 2018, Yes Bank Limited had invested Rs 3,700 crore in the short term debentures of DHFL.

"Simultaneously, Kapil Wadhawan of DHFL paid kickback of Rs 600 crore to Rana Kapoor and his family members in the garb of loan of Rs 600 crore (given by DHFL) to DOIT Urban Ventures (India) Pvt Ltd (Rana Kapoor group company)."

"In addition to the above, Yes Bank Ltd had also sanctioned a loan of Rs 750 crore to RKW Developers, a group company of DHFL beneficially owned by Kapil Wadhawan, Dheeraj Wadhawan and their family members," the ED alleged.

This loan of Rs 750 crore had been sanctioned to them for their Bandra Reclamation Project, Mumbai, but the entire amount was siphoned off by Kapil Wadhawan and Dheeraj Wadhawan through their shell companies, it said.

Rana Kapoor, Kapil Wadhawan and Dheeraj Wadhawan have been arrested by the ED in this case and they are in judicial custody at present.

The agency had also filed charge sheets before a special court in Mumbai in this case.

The ED had earlier attached properties in this case and with this order, the total attachment in this probe stands at Rs 2,011 crore.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

YES Bank hits 10% lower circuit after listing of shares allotted in FPO

Shares of YES Bank were locked in 10 per cent lower circuit at Rs 12.30 on the BSE on Monday after the listing of fresh shares allotted in the follow-on public offer (FPO).
Till 09:17 am, a combined 198.51 million equity shares had changed hands and there were pending sell orders for 360 million shares on the NSE and BSE, exchange data shows.

"12,504 million equity shares of YES Bank are listed and admitted for trading on the exchange with effect from July 27, 2020. These shares rank pari-passu with the existing equity shares of the company," said the BSE in its release.
The private sector lender raised Rs 15,000 crore through FPO by issuing shares at the price of Rs 12 per share.
The stock of the new generation private sector bank has consistently been falling since the pricing announcement of the FPO. The scrip was down for 11 out of the past 12 trading days. It has fallen 54 per cent from the level of Rs 26.65 on July 9, 2020.
YES Bank has stated in its prospectus that the funds raised via FPO will be used for growth and expansion including enhancing its solvency, capital adequacy ratio and evolving regulatory requirements.
Analysts at Angel Broking believe that retail deposit is the key for any bank for lower cost of funds. However, YES Bank has witnessed sizable deposit withdrawal over the last 2 quarters. Rebuilding CASA and deposits is a challenging task and would take longer time, it said.
Although, rating agency Moody's feels that capital raising by the bank is credit positive. The fresh equity capital injection of about Rs 15,000 crore ($2 billion) is credit-positive for YES Bank as it strengthens the lender’s capitalisation and loss-absorbing buffers. It will also reduce default risk for its creditors, it said.
The successful equity raise reflects YES Bank's regained access to external market funds. This, in turn, shows the bank’s improving financial strength and will help support depositor confidence, Moody’s said in a statement.

YES Bank FPO to open on July 15, raise up to Rs 15,000 crore

Private sector lender YES Bank on Thursday said it has filed a red herring prospectus to raise up to Rs 15,000 crore through issuance of fresh equity shares in its further public offering (FPO).
The offer will open on July 15, 2020 and close on July 17, 2020.

Earlier this week, YES Bank had received approval from the capital-raising committee (CRC) of its board of directors to raise funds through the offering.
"The bank has filed a red herring prospectus dated July 7, 2020 (RHP), in connection with the offer, with the Registrar of Companies, Maharashtra at Mumbai," YES Bank said in a regulatory filing.
YES Bank said the offer size of the FPO is Rs 15,000 crore, by way of a fresh issue of equity shares, including an employee reservation portion of up to Rs 200 crore.
ALSO READ: State Bank of India to invest up to Rs 1,760 crore in YES Bank's FPO
The executive committee of State Bank of India's central board has given approval for a maximum investment of up to Rs 1,760 crore in the FPO of Yes Bank, an SBI statement said on Wednesday.
On March 13, the government had approved a bailout plan for YES Bank. Under the plan, YES Bank had received around Rs 10,000 crore from eight financial institutions, including Rs 6,050 crore from SBI.
On Tuesday, YES Bank had said a meeting of the CRC of the bank is scheduled to be held on or after July 10, 2020, to consider and approve, amongst other things, the price band and discount, if any.
Shares of YES Bank were trading 2.49 per cent higher at Rs 26.75 apiece on BSE.

RBI bars YES Bank from coupon payment on Upper Tier II bonds

The Reserve Bank of India has restrained private sector lender YES Bank to pay interest (coupon) on the Tier II bonds as its capital adequacy ratio was below regulatory requirements.
The private lender had approached banking sector regulator RBI seeking approval to pay interest due as on June 29, 2020 for Upper Tier II Bonds. These Unsecured Non-Convertible Upper Tier II bonds carry coupon of 10.25 per cent.
Its overall capital adequacy ratio stood at 8.5 per cent at end of March 2020 with Common Equity tier I (CET I) of 6.3 per cent. Its stock was trading 1.8 per cent lower on BSE. The capital adequacy ratio is below the regulatory requirements.
The bank informed exchanges that RBI has expressed its inability to accede to bank’s request for payment of Interest due, since it does not meet the minimum capital requirements currently. Therefore, the bank would be unable to pay Interest or coupon on the said Upper Tier II Bonds.
ALSO READ: YES Bank board may take a call on Monday to raise Rs 10,000 cr via FPO
The Interest amount due and remaining unpaid shall be accumulated and be paid later, subject to Bank complying with the stipulated regulatory requirement, it added.
Bank has plans for raising equity capital to enhance capital adequacy ratio, support growth and create buffers for Covid-19. Its shareholders' have approved proposal for an aggregate capital raise of up to Rs 15,000 crore.
This capital raising from markets would be further aided by sources of organic capital (internal generation). It plans to do so by resolution of Stressed asset resolution and asset sell-down.
The deferred tax asset of Rs 6,118 crore deducted from net-worth for computing CET 1, representing about 2.55 per cent in CET 1 could potentially available to the bank over time, according to Bank presentation.

YES Bank acquires 24.19% stake in Dish TV through pledged shares

Private sector lender YES Bank has acquired 24.19 per cent in Dish TV, making it the second-largest shareholder in the direct-to-home (DTH) company.
The bank’s move to pick up a stake in Dish TV comes following an invocation of pledged shares to the tune of 445.3 million in the firm, the lender said in a filing to the stock exchanges late on Friday night.

The promoter family, led by Jawahar Goel, brother of Essel group promoter Subhash Chandra, now owns 30.37 per cent in Dish TV, counted among the leading DTH players in India with net sales of Rs 6,166 crore (for FY2018-19). The promoter family earlier held 54.56 per cent in the company, its March 31, 2020, shareholding pattern shows.
As of Friday’s close, Dish TV’s market capitalisation stood at Rs 788 crore. The firm has shed 67 per cent of its value since January this year.
This is the sixth such transaction by YES Bank in a year in various companies. Last year, YES Bank had invoked pledged shares of CG Power, Cox & Kings, and Reliance Infrastructure. While earlier this year, it had invoked pledged shares of Reliance Power and Sical Logistics, as investor pressure to reduce its exposure to debt-laden firms grows. As of March 31, 2019 (FY19), Dish TV’s debt stood at Rs 2,758 crore.
ALSO READ: Unlock 1.0 kicks in: Hotels, malls, places of worship to open from June 8
It is yet to declare its full-year FY20 results.
Pledged shares as a percentage of promoter shareholding in Dish TV now stands at 88.31 per cent. At the end of the March 2020 quarter, it stood at 93.43 per cent.
chartYES Bank clarified on Friday that the decision to buy stake in Dish TV was a "one-time" affair.
"The shares have been acquired subsequent to a default of the terms of the credit facilities sanctioned by YES Bank to Essel Business Excellence Services, Essel Corporate Resources, Living Entertainment Enterprises, Last Mile Online, Pan India Network Infravest, RPW Projects, Mumbai WTR and Pan India Infra projects," it said in its note to the stock exchanges.
Last year, Chandra and his family had to offload a 16.5 per cent stake to existing investors in Zee Entertainment, the flagship firm of the Essel group, to pay off promoter loans.
ALSO READ: IDBI Bank posts Rs 135 cr profit in Q4 on account of bad loan recoveries
While Chandra stepped down as Zee chairman in November last year, he and his family retained management control in Zee with only 5.9 per cent stake. His son Punit Goenka was reappointed Zee MD and CEO from January 1 this year.
Dish TV, on the other hand, which had been talking to Airtel DTH, for a possible merger had to call off the deal in February following differences over valuation. It has since been talking with global financial investors for a stake sale, which is yet to fructify.
According to the Telecom Regulatory Authority of India, Tata Sky has a market share of 31.61 per cent in the DTH market, followed by Dish TV at 31.23 per cent and Airtel DTH at 23.39 per cent respectively.

YES Bank board clears Rs 5,000 cr capital raising plan in multiple tranches

Ailing private sector lender YES Bank will raise up to Rs 5,000 crore as equity capital in the second round to meet regulatory requirement and support business.
The board, at its meeting on Thursday, approved raising of funds for an additional amount aggregating up to Rs 5,000 crore in one or more tranches, by issuing securities, the bank informed the exchange. Its shares closed 10.27 per cent lower at Rs 26.65 per share on the BSE.

The bank has kept options open to use routes like qualified institutional placement, public issue, rights issue, global depository receipts, American depository receipts, and foreign currency convertible bonds or any other permissible mode, it added.
Its reconstituted eight-member board held a nine-hour-long meeting via videoconference. Besides enabling resolution for capital raising, the directors dwelled on employee concerns and work being done by them in trying times, said banking sources.
The bank is a board-driven company. Earlier, it was run by administrator Prashant Kumar under the reconstruction scheme, which came into effect on March 5. Kumar is now the managing director and chief executive officer of the bank.
While the bank had prepared the broad contours of a strategic plan, the COVID-19 outbreak has added new challenges. The management will begin a dialogue with investment bankers to chalk out a plan for raising fresh capital and assess market appetite for shares from the bank, said sources.
According to rating agency ICRA’s estimates, YES Bank will require equity infusion of Rs 9,000-13,000 crore to meet regulatory capital requirements, including capital conservation buffers (CCB). The regulatory norms require banks to maintain a CCB of 2.5 per cent as on March 31.
Early this month, the bank received an equity infusion of Rs 10,000 crore from eight domestic banks, led by State Bank of India. The bank has a write-down of AT-I bonds. This is expected to improve capital ratios — common equity tier-1 (CET-1) and Tier-1 of 7.6 per cent and 7.8 per cent, respectively. The capital adequacy ratio (CAR) will be more than 9 per cent.
YES Bank’s regulatory CAR (Basel III) stood at 4.1 per cent (CET-1 of 0.6 per cent and Tier-I of 2.1 per cent) as on December 31, 2019.

RBI names R Gandhi, Ananth Gopalkrishnan addl directors on YES Bank Board

The Reserve Bank of India (RBI) on Friday appointed R Gandhi and Ananth Narayan Gopalakrishnan as additional directors to the board of private sector lender YES Bank for a period of two years.
This will be R Gandhi’s second stint as an additional director on the YES Bank board. Gandhi, a former deputy governor of RBI, was previously appointed to the YES Bank board as an additional director by the RBI in May 2019 for a period of two years. His term was to expire in May 2021 but earlier this month the central bank superseded the previous board of YES Bank.

Ananth Narayan Gopalakrishnan, an associate professor at SP Jain Institute of Management and Research is an international banking and financial markets expert. He was previously Standard Chartered Bank's regional head of financial markets for ASEAN and South Asia.
The government notifying the YES Bank reconstruction proposed by the RBI had constituted a four-member board wherein Prashant Kumar, the current administrator of the bank, was appointed as the managing director (MD) and chief executive officer (CEO), and Sunil Mehta, former non-executive chairman of Punjab National Bank, was appointed as the non-executive chairman of the bank.
The other members of the board include Mahesh Krishnamurthy and Atul Bheda as non-executive directors. State Bank of India, the biggest investor in YES Bank via the reconstruction scheme, has nominated Partha Pratim Sengupta and Swaminathan Janakiraman to the YES Bank board.
The newly-constituted board is expected to meet soon.

YES Bank ATMs full of cash, normal operations from tomorrow: Prashant Kumar

YES Bank will resume "normal operations" from 6pm on Wednesday and it has no liquidity problem, said the administrator of the private lender under moratorium till April 3.
"Our customers will be able to enjoy all services available before the moratorium," said Prashant Kumar at a press conference in Mumbai.
"There is absolutely no issue on liquidity side from YES Bank; all our ATMs are full of cash," he said.

 

Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said deposits in YES Bank were safe, requesting depositors not to be in a hurry to withdraw.
Kumar welcomed Das's statement, calling it a "very, very positive thing".
The government on March 5 placed YES Bank under a moratorium, with the RBI taking over from its board for 30 days, and imposed limits on withdrawals to protect depositors.

YES Bank resumes inward NEFT, IMPS services; customers can now pay dues

Troubled lender YES Bank enabled its inward IMPS/NEFT services. Customers can now make payments towards YES Bank credit card dues and loan obligations on other accounts. Earlier, the new YES Bank administrator Prashant Kumar said that the moratorium imposed by the Reserve Bank of India could be lifted before the end of this week.
The bank, which had over Rs 2.09 trillion in deposits, was put under moratorium last Thursday due to an inability to raise capital. Its board was superseded and Kumar was placed as the administrator.

YES BANK
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Inward IMPS/NEFT services have now been enabled. You can make payments towards YES BANK Credit Card dues and loan obligations from other bank accounts. Thank you for your co-operation.@RBI @FinMinIndia
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State Bank of India's legal team has started due diligence as the public sector lender prepares to infuse Rs 2,450 crore to pick up to 49 per cent stake in the troubled private sector YES Bank after it was placed under administration by the RBI.

ED seizes Rajiv Gandhi painting; many of YES Bank's big loans under scanner

As part of its money-laundering investigation against arrested YES Bank co-founder Rana Kapoor, the Enforcement Directorate (ED) was now looking into several multi-crore-rupee loans issued by YES Bank to corporate houses that turned non-performing assets (NPAs), officials said.
The ED has widened its probe in the case, taking it beyond the loan it gave to Dewan Housing and Finance Limited (DHFL) and is now looking at the bank's books to see if the Kapoor family and others received any kickbacks from business houses in lieu of non-initiation of the loan recovery processes.

The central agency is probing the Rs 600-crore loan scam-hit DHFL gave to a firm "controlled" by Rana Kapoor's family -- his wife and three daughters -- allegedly for not recovering from it over Rs 4,000 crore of loans issued by YES Bank.
YES Bank CEO Ravneet Gill was questioned by the Enforcement Directorate (ED) at its office in Mumbai on Monday, news agency PTI reported on Monday quoting sources.
The sources added that the investigators had also zeroed in on Kapoor's purported foreign assets in the UK, France and the US to see if the proceeds of money laundering had been used to purchase these assets by the banker and his family.
A dozen alleged shell firms, the Kapoor family's investments of Rs 2,000 crore, and over Rs 4,500 crore worth of other transactions are under the scanner of the agency at present.
The agency has also found that 44 costly paintings, one of them purchased from Congress leader Priyanka Gandhi Vadra, are allegedly in the possession of Kapoor. The ED has seized that painting and brought to its office.
A letter written by Priyanka Gandhi to Kapoor in June 2010 confirmed the sale of this portrait of her father and former prime minister Rajiv Gandhi, painted by M F Husain, for Rs 2 crore. In the letter, Priyanka Gandhi thanked Kapoor for purchasing the portrait "which was presented to him in 1985 at the Congress party centenary celebrations and is presently in my ownership and possession".
While the Congress party has said that the deal was transparent, as the payment of Rs 2 crore was received by Vadra from Kapoor through cheque and was reflected in income tax returns, the ED is probing if the painting was owned by her or the All India Congress Committee (AICC).
It is also investigating if the provenance certificate (signed by an artist to state his genuine work) was signed by Vadra and under what circumstances. Apparently, this Rs 2 crore was used by Vadra to purchase a property in Himachal Pradesh.
The portrait had been made by celebrated artist Husain and gifted to Gandhi during the AICC centenary celebrations in 1985.
Kapoor and his wife are also expected to be confronted by the ED with Kapil Wadhawan, DHFL promoter and CMD. He was arrested by the ED in the Iqbal Mirchi PMLA case and is out on bail at present.
A big housing finance company and a financial insurance firm are also under the scanner of the ED for their dealings with Kapoor and YES Bank.
A particular instance of a popular power generation company taking Rs 500 crore loan from the bank and it later turning NPA is also being probed by the ED.
The Income Tax Department is also set to initiate action against Kapoor and others for tax evasion and possession of alleged undeclared foreign assets.
Meanwhile, the Odisha unit of the Bharatiya janata Party (BJP) on Monday alleged a conspiracy behind the deposits of Rs 545 crore of the Shree Jagannath Temple in capital-starved bank and demanded a probe into it by the ED. Senior BJP leader Bijay Mohapatra also claimed the involvement of some members of the Jagannath Temple Managing Committee and two government officials in depositing the funds in the private bank.
The ruling Biju Janata Dal (BJD), however, rubbished the allegations and said the saffron party was misleading the people. The Odisha government had on Sunday sought the Centre's intervention for release of the funds in the interest of devotees.
BJP state general secretary Prithviraj Harichandan had on Sunday held the state government responsible for pushing the temple's funds into uncertainty. Reacting to the charges, BJD spokesperson and the party's Rajya Sabha nominee Subhas Singh said: "The BJP leaders are trying to mislead people over the matter. It is an old habit of Mohapatra to politicise issues related to the Lord Jagannath Temple.
Earlier, Congress Legislature Party leader Narasingha Mishra had demanded a statement from Chief Minister Naveen Patnaik over the matter. Odisha Chief Minister Patnaik has been silent on the issue.
In another development, bondholders with exposure to YES Bank's Additional Tier-1 (AT-1) securities have approached the Bombay High Court against a decision to write down their investments in the struggling bank as part of a draft rescue plan, news agency IANS reported.
Under the draft resolution plan for YES Bank given by the Reserve Bank of India (RBI) after superseding its board, the banking regulator capped deposit withdrawals at Rs 50,000 per person and appointed an administrator. It also proposed to write off Rs 8,400 crore worth of AT1 bonds on the lender's balancesheet while retaining equity.
Axis and Nippon India Mutual Fund Trustees may have moved the court to seek relief. It is, however, yet to be confirmed by the fund houses. According to an Icra report, 16 Indian banks have Rs 93,669 crore worth of AT1 bonds outstanding. But the development in case of YES Bank has triggered a debate about the seniority of the AT1 bondholders over equity investors.
But RBI is within its powers to write down AT1 bonds under Basel-III norms.

YES Bank to transform into a retail bank: Administrator Prashant Kumar

Prashant Kumar, the new man in charge of YES Bank, has chalked out the strategy of the beleaguered bank, which includes selling down part of its vast portfolio of corporate loans, and focusing on retail banking — the mainstay of its highly profitable rivals.
The focus on retail banking is the opposite of what the management led by Rana Kapoor had focused on, and which led to the accumulation of a huge amount of bad debt in its corporate loan portfolio. This had resulted in the ouster of the board by the Reserve Bank of India (RBI) last week, and a moratorium was placed on withdrawals of deposits above Rs 50,000. According to an estimate by JP Morgan, the bad loans in the bank could go as high as an additional Rs 45,000 crore.
In an interaction with Business Standard on Monday, 59-year-old Kumar said the queues at bank branches and ATMs were thinning after State Bank of India (SBI) and the RBI offered support to maintain liquidity at India’s fourth-largest private bank. “We are hopeful that by Friday we will be able to lift the moratorium on withdrawals. We are also thankful to our customers for standing by us,” said Kumar, who was appointed the bank’s administrator by the RBI.
“We are banking on three things to instill confidence in customers. First, SBI is investing up to 49 per cent of the bank’s equity, which is a big thing. Second is the speed of resolution, which is moving very fast with support from the RBI and SBI. Finally, the bank is firming up capital-raising plans and will announce these soon,” he said.
ALSO READ: YES Bank fiasco: Troubled times for consumers with EMIs, SIPs and such like
The bank will come out with its financial numbers for the December quarter by March 14, as announced earlier, Kumar said.

chart“The RBI is in the process of appointing a new board and our strategy to convert into a full-fledged retail bank will then be placed before this new board,” said Kumar.
The officials posted in the corporate loan portfolio will be asked to focus on recovering old loans instead of disbursing new ones, he said.
The bank will have to be predominantly retail (assets), the share of which should be 60-70 per cent. At present, the share of retail in the loan book is around 30-35 per cent and the rest is corporate. We need to reverse this, Kumar said.
Kumar added that it was very important for the bank to demonstrate that it would be able to meet its customers’ withdrawal demands. “If we are able to show on the first day that we will meet all the withdrawals, it will be a demonstration of our intention that all customers’ deposits are safe.”
ALSO READ: Business not as usual: YES Bank changes way banks, Mint Road are looked at
This bank has very good customer connect and our teams are reaching out to tell them we are ready to meet their demands, Kumar said.
On various UPIs (unified payments interface), which are unable to transact business because of the moratorium, Kumar said those using YES Bank’s back end will be able to transact as early as Friday, when the moratorium is expected to be lifted.
“All the systems and technology are in place. Let me assure all customers that there is nothing to worry,” Kumar said.
ALSO READ: YES Bank rescue plan: How brokerages have interpreted the proposals
The administrator said several customers who were unable to repay loan installments to other banks will be given certificates by YES Bank about the RBI’s plans, so that those banks take the moratorium into consideration and don’t penalise customers.
When asked about the quantum of withdrawals of deposits in the past few months, Kumar did not provide any figures, but said all numbers would be provided on March 14.

YES Bank expands equity offer to $2 billion; board to meet on December 10

Private sector lender YES Bank has increased the size of its equity capital offer to $2 billion from the earlier guidance of $1.2 billion on “strong interest” shown by NRI investors, including a $1.2 billion offer by Erwin Singh Braich and SPGP Holdings, and $500 million by Citax Holdings and Citax Investment Group, according to the bank.
Other prominent suitors are the Aditya Birla Family Office ($25 million), GMR Group and Associates ($50 million), and Rekha Jhunjhunwala ($25 million). Besides, a top-tier US fund house has evinced Interest to invest $120 million. Its name will be disclosed early next week. Discovery Capital will take $50 million and Ward Ferry will take $30 million.

Meanwhile, the bank has extended the deadline for the binding term sheet for Erwin Singh Braich and SPGP Holdings to December 31 from November 30.
The bank’s board of directors on Friday held a marathon meeting, which lasted over eight hours. The bank in a late night communication to the stock exchanges said investors had individually expressed their willingness to subscribe to the equity shares of the bank for an aggregate amount of $2 billion. These shares will be issued on a preferential allotment basis.
None of the Investors will be allotted equity shares such that their holding exceeds 25 per cent of the share capital of the bank.
The board of directors shall reconvene on December 10 to finalise and approve the details of the preferential allotment. It will also convene an extraordinary general meeting subsequently to obtain the approval of the shareholders.
Such preferential allotment shall be subject to receipt of all regulatory and statutory approvals, as may be applicable, the bank said. YES Bank’s regulatory capital adequacy ratio (Basel III) stood at 16.3 per cent (CET-I of 8.7 per cent and Tier I of 11.5 per cent) as on September 30, 2019. The stock closed 2.5 per cent lower at 68.3 on the BSE.
Banking on the deal
None of the investors will be allotted equity shares such that their holding exceeds 25% of the share capital of the bank
RBI approval is required for stake purchases in Indian banks of more than 5%
Any non-financial entity can buy up to 10% of a lender, and for a financial entity the cap is 15%
There’s a provision to allow a single investor to pick up 40% or more under special circumstances
YES Bank’s core equity capital is 8.70%, barely above the regulatory minimum of about 8%

YES Bank gets $3-bn offer from investors including PEs and domestic MFs

YES Bank has received offers for fund infusion of close to $3 billion from various investors, including private equity (PE) players and domestic mutual funds (MFs).
Besides the $1.2-billion binding offer, the bank has also received offers from six PE players and two domestic MFs of a further $1.5-billion investment. Further, the bank is in early stages of discussions with a few domestic investors for another $350 million in investment.

In a conference call with analysts, Ravneet Gill, managing director and chief executive of YES Bank, said the fresh capital would come in by December-end. The binding offer of $1.2 billion came from a North American investor, he added.
“We feel it is not appropriate to just clean up the books. The bank would like to raise capital,” he added, adding that the bank was open to giving a board seat to the new investor who came on board.
YES Bank gets $3-bn offer from investors including PEs and domestic MFs
The bank is in dire need of capital to not only provide for bad assets but also for growth. The common equity tier-1 (CET-1) capital stood at 8.7 per cent as of September, close to the regulatory requirement of 8 per cent till March 2020. The bank had, in August, raised Rs 1,930 crore via qualified institutional placement at an issue price of Rs 83.55 a share, which provided a breather.
The bank posted 91 per cent decline in profit before tax to Rs 122 crore in the September quarter, compared to Rs 1,426 crore last year. The private lender reported net loss of Rs 600 crore, owing to a one-time deferred tax asset adjustment of Rs 709 crore. In the same quarter last year, it had reported net profit of Rs 965 crore. The stock closed at Rs 66.6 on Friday, down 5.46 per cent in anticipation of weak numbers. This followed the 24 per cent gain on Thursday after announcement of the binding offer.
However, shares recovered ground from their 52-week low of Rs 29.05 apiece, reached on October 1. This was the third-biggest single-day gain for the volatile stock after it zoomed 33 per cent in early October, and 30.7 per cent in mid-February.
The bank also reported contraction in key parameters. Net interest income fell more than 9 per cent to Rs 2,186 crore in Q2FY20, compared to Rs 2,418 crore in the year-ago period. Non-interest income declined 35.8 per cent to Rs 946 crore, while operating profit slumped 38.4 per cent to Rs 1,458 crore.
Asset quality deteriorated sharply, with gross non-performing asset ratio at 7.39 per cent in Q2FY20, compared to 1.6 per cent in Q2FY19. Likewise, net NPA ratio stood at 4.35 per cent in Q2FY20, against 0.84 per cent in Q2FY19. Gross slippages came in at Rs 5,945 crore. YES Bank said it does not expect any substantial increase in stress, barring risks from the commercial real estate loan book.
Lalitabh Shrivastawa, vice-president (research), Sharekhan by BNP Paribas, said that while a capital infusion was much needed, the pricing and timing of the same was still not clear. The asset quality picture continues to be weak, and substantial increase in credit cost guidance underlines the concern.

Yes Bank gets $1.2 bn binding offer from a global investor for a stake sale

Yes Bank Ltd. said it got a $1.2 billion binding offer from a global investor for a stake sale, resulting in a rally that helped make it the world’s best performing bank share this month.
The Mumbai-based lender jumped 24% at the 3:30 p.m. close in Mumbai on Thursday following the announcement. The company didn’t name the investor in its exchange filing, though CNBC-TV18 said it was Hong Kong-based SPGP Holdings. The report didn’t cite anyone.

Yes Bank has been foundering since last year, culminating in the departure of co-founder Rana Kapoor, who was forced out by India’s central bank amid a dispute over the lender’s reporting of bad debts. Chief Executive Officer Ravneet Gill was brought in from Deutsche Bank AG in March to stabilize operations, and has spent the past few months trying to raise capital. A sale would reassure investors, who have seen the bank lose about 60% of its market value in the past year.
“If they are able to raise this capital then it will sustain Yes Bank’s growth for next one year,” said Kranthi Bathini, director at Wealthmills Securities Pvt. “But we need to know the name of the investor, timing of the capital infusion and the Reserve Bank of India’s comfort with this proposal.”
Gill said in an interview earlier this month that the share sale will happen “much sooner than the market expects.” The company has been in talks with private equity investors, technology companies and family offices.
Yes Bank rose to 70.30 rupees in Mumbai on Thursday. Its 3.75% U.S. dollar notes due February 2023 gained 3.9 cents on the dollar to 89.2 cents, according to prices compiled by Bloomberg.
Yes Bank shares have been volatile this year as investors react to news of the lender raising capital, and its attempt to resolve bad loans. They have risen 70% this month but are still down 62% over the past year.
A transaction is subject to regulatory and other approvals, according to the statement. The company is scheduled to release its quarterly earnings on Friday.

Yes Bank Q1 consolidated net profit slumps over 92% to Rs 96 crore

Private sector Yes Bank Wednesday reported a slump of over 92.4 per cent in its consolidated net profit to Rs 95.56 crore in the first quarter ended June this fiscal.
The bank had reported a net profit of Rs 1,265.67 crore in the April-June quarter of the previous fiscal ended March 2018.

Sequentially, the private sector lender had posted first ever loss of Rs 1,508.44 crore in the quarter ended March, 2019 due to mounting bad loans.
Total income (consolidated) increased to Rs 9,105.79 crore in three months to June of 2019-20, up from Rs 8,301.06 crore in the same quarter of 2018-19, the bank said in regulatory filing.
On standalone basis, the bank's net profit stood at Rs 113.76 crore in April-June period this fiscal, down by 91 per cent from Rs 1,260.36 crore a year ago.
Income (standalone) increased to Rs 9,088.80 crore during the first quarter, as against Rs 8,272.18 crore in the same period previous fiscal.
In terms of asset quality, the gross non-performing assets (NPAs) of the bank swelled to 5.01 per cent of the gross advances at June-end this year, compared to 1.31 per cent in June 2018.
The net NPAs rose to 2.91 per cent from 0.59 per cent a year ago.
In value terms, the gross NPAs or bad loans were at Rs 12,091.10 crore at June-end this year, up from Rs 2,824.46 crore. The net NPAs stood at Rs 6,883.27 crore, compared to Rs 1,262.57 crore.
Stock of Yes Bank closed at Rs 98.45 on BSE, down 5.25 per cent from previous close.

Former CEO Rana Kapoor says not trying for seat on YES Bank board

Rana Kapoor, the former managing director and chief executive at Yes Bank, Thursday denied reports that he is attempting a comeback to the bank and said he has full confidence in his successor Ravneet Gill.
Kapoor's term was curtailed by RBI due to a slew of concerns, including poor governance and loan practices. Gill took over on March 1 and began a massive clean-up which resulted in the bank booking a maiden quarterly loss of over Rs 1,500 crore.

"Media reports have suggested that I am attempting a comeback to the board, in spite of my unequivocal denial to them," Kapoor said in a series of tweets.
Kapoor, who continues to hold over 9 percent in the bank, said he has "the fullest confidence and conviction" in Gill and the board.
Terming Gill's efforts as "Hanumanian", probably comparing it with the efforts mounted by one of Lord Ram's devotees in Hindu mythology, Kapoor exuded confidence that the bank will overcome this "transitional phase".
ALSO READ: YES Bank dips 6% to hit 40-month low as global brokerage downgrades stock
The Rana Kapoor promoter group fully supported and voted in favour of the 19 resolutions put up at the AGM held Wednesday.
Some of the investors voiced concerns on the state of corporate governance at the lender at the meeting, according media reports. Two directors -- Ajai Kumar and Mukesh Sabharwal -- had quit the board in the run-up to the AGM, fuelling speculation on what are the causes for the sudden action.
Earlier in the week, global ratings agency Moody's had threatened to downgrade the bank's rating citing its large exposures to the struggling non-banking lenders and realty segments and ruled an upgrade over the next 12-18 months. The bank has plans to raise up to USD 1 billion in core capital.
For the March quarter, the bank had posted a loss of Rs 1,506 crore because of heightened provisioning on risky exposures of Rs 10,000 crore which were flagged off as the ones likely to slip into NPAs.
Kapoor's tweets come on a day when the bank scrip is being hammered, possibly as a reaction to a report by Swiss brokerage UBS, which sharply cut its price estimate on the stock saying the risks of NPAs is higher than current expectations.
It also expects the metrics, including margins, fee income and loan growth to "deteriorate significantly" in FY20, while cutting the stock price expectation to Rs 90. There was also a report saying the bank has dropped out of the list of the ten most valued lenders.
The bank scrip was trading 10.10 percent down at Rs 121.05 on the BSE at 1357 hrs, as against a 0.34 percent correction on the benchmark.

YES Bank begins provisioning for exposure to ADAG, Essel group firms

YES Bank, which has exposures to Anil Ambani's Reliance group and Essel group companies, has started making provisions for loans given to both entities. The provisioning began after rating agencies downgraded debt instruments of both groups.
YES Bank has an exposure of Rs 13,000 crore to Reliance group entities and another Rs 3,300 crore to Essel group companies, according to analysts. Though the bank has adequate collateral in terms of shares pledged by promoters of the two groups, YES Bank investors are concerned about the bank's exposure.

A source said several companies of the Anil Dhirubhai Ambani Group (ADAG) are doing well and the group is taking steps to repay banks. ADAG sold its electricity distribution business to Adani last year to lower its debt. It is also in the process of selling stakes in its mutual fund and general insurance arms. YES Bank's exposure to the Reliance group is almost 37 per cent of the bank's tier-1 capital.
YES Bank had asked Essel group promoters in January this year to increase its collateral so that the lender can ring-fence its exposure. The debt-laden group had asked for time till September to repay loans, after it sells a stake in flagship company Zee Entertainment.
The source said the bank is hopeful the sale will take place on time and its loans will be recovered in full.
Yes Bank's shares have tumbled by half since April 1. On Tuesday, the stock closed at Rs 141 a share, 1.8 per cent lower than its Monday closing. Early this month, the Reserve Bank of India (RBI) had appointed former deputy governor, R Gandhi, to the bank's board.
Soon after Ravneet Gill took charge as the new CEO on March 1, the bank announced a net loss of Rs 1,507 crore for the quarter ended March 2019 (Q4) due to a fall in its non-interest income and a sharp rise in the provisioning for bad loans.
Gross non-performing assets (NPAs), as a percentage of gross advances, soared to 3.22 per cent in Q4, compared to 1.28 per cent in the year ago period.
Bad loan provisions stood at Rs 3,662 crore in Q4 and at Rs 5,778 crore for the full financial year of 2018-19, including specific loan loss provisions of Rs 1,270 crore, and mark-to-market provisions of Rs 243 crore. This also included contingent provisions of Rs 2,100 crore against a stressed asset of Rs 10,000 crore. This provisioning has a major bearing on the bank's credit portfolio, which is predominantly in the below investment grade rating.
In its analyst call, YES Bank said the provisioning covers companies from real estate, media and entertainment and infrastructure, but did not provide any names.
Its provision coverage ratio -- at 33 per cent -- of total stressed assets is significantly lower than its loss, given the loan default experience of Indian banks. The coverage includes the provisioning for non-performing loans, standard assets and contingent provisions for stressed assets.

Yes Bank clean-up to continue as Gill shifts focus to governance practices

Ravneet Gill, the new chief executive at Yes Bank wants to increase focus on compliance and governance two critical areas in which his predecessor Rana Kapoor was found wanting to ensure that the bank is on the side of regulator.
This indicates that Gill is not only cleaning up the balance sheet which saw the fifth-largest private sector lender announcing the first-ever loss of a whopping Rs 1,506 crore over the weekend, but also the governance practices, which led to the ouster of Kapoor by the regulator earlier this year.

Among other deficiencies, the RBI had reportedly found serious lapses in governance and poor compliance culture at Yes Bank under Kapoor who was a co-promoter and chief executive, whom Gill succeeded in March after RBI asked to leave by end January due to a regulatory discomfort.
Addressing analysts hours after shocking with a Rs 1,506-crore loss in the March quarter, Gill cited a recent meeting with a large MNC to cite perception issues.
The multinational, which banks with a foreign lender, wanted to undertake a large remittance transaction and came to Yes Bank to check if it can get the job done without the hassle of going through the RBI, something which the foreign lender insisted on.
"This is the perception that exists but we want to get away from that. We want to send out a very clear messaging to the market that we want to be very closely aligned with the regulator, by being on the side of the regulator and the regulator should be able to validate that," Gill said.
Similarly, on governance too, he said the new leadership is very serious about confirming to the highest standards of governance and also set new industry benchmarks.
"Over a period of time, weve attracted lots of regulatory scrutiny which were not exactly in our best interest", he admitted reasoning the need for a cultural change at the lender.
Conceding that there may be a perception issue where the market even may stop trusting the numbers put out by the bank, Gill said he wants to set in greatest transparency by moving to conservative and prudent accounting.
The move to take a Rs 2,100 crore contingency provision for the March quarter, the prime reason for the maiden loss shown by the bank, is the same and not kitchen sinking, Gill said.
We thought lets go and put it out there that we are setting a new course for ourselves in terms of transparency, Gill, who previously worked as the country head of German lender Deutsche Bank, said.
In its communications before curtailing Kapoors term, RBI had reportedly said there is a persistent governance and compliance failure reflected by yes Bank's highly irregular credit management practices, serious deficiencies in governance and a poor compliance culture.
On the operational front, Gill rued that there is a lot of centralisation on the market approach, especially on the retail side, and said this is something he will work on to deliver better returns.
The bank was very centralised from a decision- making perspective, which actually flies into the face of the logic that liabilities business has to be driven by bottom-up, he said.
Gill admitted that only 30 percent of its 1,100 branches are profitable and it has initiated a branch-wise review that entails detailing key performance indicators and the business to be targeted.
The aim is to make 80 percent of branches profitable by 2023 and make it 100 percent by 2025, he added.
Gill said corporate lending will now become the calling card for the lender and the attempt is to only diversify the loan book.
He also admitted that the bank lacks the needed focus on cross-selling and transaction banking, which will now be a key focus area.
Explaining the same, Gill said the banks revenue at present is limited to interest income and some fees as it focuses merely on loan underwriting, but a cross-sell strategy can deliver better credit commissions, forex fees, guarantee commissions etc and can help the bank bridge the gap with its peers from a fund-cost perspective, which is adrift at high 125-150 bps now.
It can be noted that many lenders, especially those focused on corporates and wanting to grow their retail play, have lately adopted a cross-selling strategy, making it seem almost like a trend.
Gill said while Yes Banks retail book may be small, it has grown impressively and is one of the best in industry.

YES Bank posts first-ever quarterly loss of Rs 1,507 cr on IL&FS, Jet loans

Private lender YES Bank posted its first quarterly loss, of Rs 1,507 crore, during the January-March 2019 period on account of a fall in non-interest income and a sharp increase in provisioning for bad loans, mainly due to defaults by the Infrastructure Leasing & Financial Services (IL&FS) group and Jet Airways. It had reported a net profit of Rs 1,179 crore in the fourth quarter of FY18.
For the full year, the bank's net profit more than halved to Rs 1,709.3 crore from Rs 4,233 crore in 2017-18.

The bank’s results, the first under new Managing Director and CEO Ravneet Gill, were declared after an eight-hour long board meeting on Friday. Gill in a conference call with analysts said the bank would no longer be chasing the high growth targets of the past but would focus on consistent calibrated growth.
Gross non-performing assets (NPAs) as a percentage of gross advances soared to 3.22 per cent as of March 2019, compared to 2.1 per cent as of December 2018 and 1.28 per cent as of March 2018.
The bank saw slippages of Rs 3,480 crore during the quarter, of which Rs 552 crore was from an “airline company” and Rs 529 crore from a “stressed infrastructure conglomerate”.
YES Bank’s total exposure to IL&FS stood at Rs 2,528 crore as of March 31, 2019, of which Rs 2,442 crore has been classified as NPA. “Rs 86 crore continues to be classified as ‘standard’ and the bank has a provision of 15 per cent against this standard exposure,” said the bank in a statement.
About probe into whistle-blower complaints, the bank said it was conducting an internal enquiry into allegations about operational irregularities, incorrect NPA classification, and conflict of interest in relation to former MD and CEO Rana Kapoor. It has not identified any material financial impact so far.
YES Bank posts first-ever quarterly loss of Rs 1,507 cr on IL&FS, Jet loans The bank has also appointed Shagun Kapur Gogia, a nominee of the Madhu Kapur camp, and Ravinder Kumar Khanna additional directors on the board. “We will be focusing on a higher standard of compliance to gain the RBI’s validation and I am sure we will receive that soon,” Gill told analysts.
The bank’s provisions stood at Rs 3,662 crore for Q4 FY19 and at Rs 5,778 crore for FY19. This also included contingent provisions of Rs 2,100 crore against an identified stressed book of Rs 10,000 crore.
Net interest income (NII) for the quarter, which is interest earned less interest expended, grew 16.3 per cent to Rs 2,506 crore in Q4 FY19 as against Rs 2,154 crore in the year-ago quarter. The bank’s net interest margin declined to 3.1 per cent in March 2019 as against 3.4 per cent in the March 2018 quarter.
Non-interest income at Rs 532 crore for March 2019 fell by 62.6 per cent year-on-year. The fall was mainly due to low corporate banking fees on account of one-time reversal of Rs 280 crore and calibrated corporate growth, said the bank.
The bank’s management said it would make accounting changes for corporate fees, which would bring in an element of deferment of corporate fee recognition along the term of the loan given. The bank’s total capital adequacy ratio stood at 16.5 per cent with common equity tier-1 of 8.4 per cent as of March 2019.
The bank’s board approved raising debt up to Rs 20,000 crore and equity capital up to $1 billion (about Rs 7,000 crore), subject to approval from shareholders. The bank has not specified the time frame for raising capital. Its advances grew by 18.7 per cent year-on-year to Rs 2.42 trillion in FY19, while deposits grew by 13.4 per cent to Rs 2.27 trillion.

YES Bank falls 7% as senior group president Pralay Mondal resigns

Shares of YES Bank were down for the fifth straight day, down 7 per cent to Rs 182 apiece on BSE on Friday, after the private sector lender announced that Pralay Mondal has tendered his resignation as Senior Group President and Head - Retail & Business Banking of the bank on January 31, 2019. YES Bank was the top loser among Nifty Bank and Nifty Private Bank indices.
In the past one week, YES Bank was down 17 per cent, erasing its entire gain recorded after the bank on January 24, 2019 said that it has received the Reserve Bank of India (RBI) approval to select Ravneet Singh Gill as its new managing director and chief executive officer (MD & CEO).

"YES Bank would like to notify that Pralay Mondal has tendered his resignation as Senior Group President and Head - Retail & Business Banking of the bank on January 31, 2019. He will serve notice till close of business hours of March 31, 2019", as per the press release.
Meanwhile, Rana Kapoor, co-founder of YES Bank on Thursday demitted office as the MD & CEO of the bank after the RBI last year in September asked him to leave office by January 31.
The midsized private sector lender yesterday appointed its non-executive director Ajai Kumar who had led state-run Syndicate Bank in the past, as his interim successor for a month till Ravneet Singh Gill from Deutsche Bank India takes over from March 1.
Analysts at JP Morgan rated YES Bank 'Neutral', as the brokerage firm sees valuation as range-bound until issues surrounding leadership and equity-raising are resolved.
"YES Bank’s loan growth should moderate in FY20 as the base effect builds. Further, given the unusual set of circumstances around the CEO’s (Mr. Rana Kapur) departure, the market may question the sustainability of credit costs and NPLs. RBI’s divergence report and a smooth leadership transition could help address that", the brokerage firm said in December quarter