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Wednesday, May 27, 2020

SBI to buy up to 49% stake in Yes Bank for Rs 7,250 crore

The scheme says that the investor bank should agree to invest in the equity of the reconstructed bank (Yes Bank) to the extent that post-infusion it holds 49 percent shareholding in the bank at a price not less than Rs 10 — face value of Rs 2 and a premium of Rs 8

By: ENS Economic Bureau | Mumbai | Updated: March 13, 2020 1:05:03 am
yes bank, yes bank crisis, yes bank trouble, sbi, sbi bank, yes bank shares, buisness news, indian express ‘Our shareholding in Yes Bank Ltd. will remain within 49 percent of the paid-up capital of Yes Bank,’ SBI said in a regulatory filing. (File)

State Bank of India (SBI), which is working out a bailout package for troubled Yes Bank, on Wednesday said it will buy shares worth Rs 7,250 crore in the troubled private sector lender.

According to the state-owned bank, the executive committee of the Central Board of SBI on Wednesday accorded approval for the purchase of 725 crore shares in Yes Bank at a price of Rs10 per share subject to all regulatory approvals.

‘Our shareholding in Yes Bank Ltd. will remain within 49 percent of the paid-up capital of Yes Bank,’ SBI said in a regulatory filing.

On May 5, the Reserve Bank of India superseded the board of directors of troubled Yes Bank for a period of 30 days owing to a serious deterioration in the financial position’ of the bank and capped the deposit withdrawals at Rs 50,000 per depositor. The central bank said ‘this has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation.

On March 6, RBI unveiled a reconstruction scheme indicating the possibility of SBI, India’s largest bank, acquiring a 49 percent equity stake in the private sector lender. In the ‘Yes Bank Reconstruction Scheme’, released less than 24 hours after superseding the board of Yes Bank and appointing an administrator, RBI had said ‘State Bank of India has expressed its willingness to make the investment in Yes Bank and participate in its reconstruction scheme’.

The scheme says that the investor bank should agree to invest in the equity of the reconstructed bank (Yes Bank) to the extent that post-infusion it holds 49 percent shareholding in the bank at a price not less than Rs 10 — face value of Rs 2 and a premium of Rs 8. Setting conditions for the investment, the RBI said the investor bank should not reduce its holding below 26 percent before completion of three years from the date of infusion of the capital.

SBI was negotiating to rope in leading institutions, including HDFC, ICICI, Kotak Mahindra and other institutions for capital infusion in the private sector lender which could lead to the lifting of the moratorium in the coming days.

However, sources said the final decision on who will bring in equity will depend on the Reserve Bank of India which will decide the infusion plan. SBI Chairman Rajnish Kumar had already indicated that if other investors are in the picture, the capital infusion can go up to over Rs 20,000 crore. SBI will then hold at least 26 per cent stake — out of 49 per cent — in Yes Bank while the rest will be picked up by other institutions. Though there was speculation about some private equity players and high networth investors are keen to join the reconstruction plan, the RBI is unlikely to approve their inclusion, said a source, adding that there is also the possibility of other banks pitching in with bulk deposits of around Rs 30,000 crore to ease the liquidity crunch in the bank. The moratorium is likely to be lifted once the RBI approves the names of investors and their contorbution.

Yes Bank administrator Prashant Kumar had on Monday assured customers that the moratorium period could end by this weekend.

 

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