Local HNIs, FIs keen to invest in Yes Bank

The bank may post a loss of Rs 1,000 crore during October-December 2019-20 quarter, an analyst commented.

Local high networth individuals and leading financial institutions have evinced interest in putting money in crisis-hit Yes Bank, analysts said on Thursday.

There is lot of interest in putting money into Yes Bank because now the real value will be unlocked as the stock price has already reached Rs 26 apiece, IIFL Securities director Sanjiv Bhasin said.

There is a mixed bag of local investors, mutual funds, AMCs, HNIs alongside ICICI and HDFC, he said further.

"There is ICICI, HDFC, then there are individual HNIs like Radhakishan Damani (Dmart), Rakesh Jhunjhunwala and some mutual funds," Bhasin added.

Yes Bank's administrator Prashant Kumar, a former SBI executive, has said that the lender is in talks with various investors to raise capital.

Yes Bank was superseded by the RBI last Thursday under an administrator after it failed to raise capital.

The troubled lender will announce its third quarter results for December 2019 on Saturday and analysts expect that there will be deterioration in bank's asset quality.

"I think there will be deterioration in the asset quality, slippage would be higher, their core equity capital is expected to go below what RBI mandates," said an analyst on the condition of anonymity.

The bank may post a loss of Rs 1,000 crore during October-December 2019-20 quarter, an analyst commented.

Emkay Global Financial Services said: "We expect Yes Bank to report a loss of Rs 778 crore, mainly due to recognition of heavy corporate NPAs from its stress pool including ADAG NBFC, some real estate accounts and pending NPA provisioning for FY19."

Emkay said it believes that SBI stake buy in Yes Bank will provide immediate capital support in the phase 1 of restructuring and also ensure continued support in the future capital raise with SBI being an anchor investor.

"Apart from capital support, SBI holding stake in the bank will soothe depositors, as otherwise Yes Bank has been witnessing sharp deposit run down.

“However, we believe apart from capital infusion, bank will have to strip-off assets to further release capital and also rake up internal liquidity to pay-off depositors, where SBI can provide a pivotal role in buying these assets," it added.

Bhasin said it has to be seen how much asset quality deterioration will be there on the results day.

"Once we know that...recapitalisation, you know there is Rs 20,000 crore coming as far as capital (is concerned) and Rs 30,000 crore as deposits to allay all investors' negativity, so that is all presumption."

As per the bank's reconstruction plan, SBI has committed Rs 2,450 crore investment through an acquisition of 49 per cent equity in Yes Bank, which remains in moratorium till April 3, as bank's capital condition has jeopardised.

Yes Bank over the last over one year has failed to raise enough capital under the new leadership of Ravneet Singh Gill, who took charge as the managing director and CEO from March 1, 2019.

Troubles at new-generation private sector started brewing up ever since the Reserve Bank denied extension to its co-founder Rana Kapoor -- who now is in the custody of the Enforcement Directorate on charges of financial mismanagement and money-laundering -- to continue as MD and CEO in September 2018, and had asked the lender to find a new successor.

• Yes Bank In Trouble

Photograph: Reeti Agarwal/PTI Photo