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Four years since Yes Bank rescue, RBI greenlights an exit plan for its saviours

As per the ongoing negotiations, Yes Bank may be valued at $10 billion.

  • RBI's approval for up to a 51% stake sale in Yes Bank opens an exit for SBI, LIC and others owning stakes in the private lender that survived a near-death experience four years ago.
  • The stake sale may value Yes Bank at around $10 billion, making for the largest acquisition in India's banking sector.

The Reserve Bank of India (RBI) has okayed the sale of up to 51% stake in Yes Bank, setting the stage for a new owner for the private lender that survived a near-death experience just four years ago.

A likely stake sale may value India's sixth-largest private bank by assets at around $10 billion, two people with direct knowledge of the development said, in what would be the largest acquisition in India's banking sector.

The central bank gave its in-principle approval to Yes Bank and some of its key shareholders a few weeks ago, the people cited above said on condition of anonymity. Approving a majority stake sale is a rare decision for the regulator, which has capped 26% as promoter holding in domestic banks.

Also read | Wanted: A new owner for Yes Bank

“Some of the bidders are interested only if they are allowed to acquire 51% in the bank. While assessing the fit and proper criteria for the potential new promoter (of Yes Bank), as a special case, RBI has agreed for a 51% sale of control to an appropriate incoming promoter," one of the two people cited above said.

latest research reports on yes bank

According to the second person, RBI officials agreed to the sale plan during discussions, but has yet to issue a written approval. The central bank is still assessing the fit-and-proper status of the bidders.

The regulator approved the stake sale after considering the Yes Bank case to be a unique one given its shareholding structure, loan book and liquidity requirements, the people said.

Yes Bank has appointed Citigroup to shortlist suitable promoters. A Citigroup spokesperson declined to comment on the story.

Path to exits

The RBI approval opens up an exit path for State Bank of India (SBI) and other lenders that jointly own 33.74% in Yes Bank, which has assets worth over ₹ 4 trillion. SBI holds 23.99% in Yes Bank, HDFC Bank 2.75%, ICICI Bank 2.39%, Kotak Mahindra Bank 1.21%, and Axis Bank 1.01%. LIC owns 3.98%, while CA Basque Investments holds 8.74% and Verventa Holdings Ltd 9.21% in Yes Bank. 

The banks’ total holding in Yes Bank has dropped from 35.18% in April and 36.74% in March. Some of these banks have been advised by RBI not to sell their shares in the open market, the second person added.

Also read | Yes Bank’s turnaround: Why Prashant Kumar still has miles to go

In 2018, RBI had allowed Prem Watsa-owned Fairfax Group to pick up 51% in the then loss-making Catholic Syrian Bank, the first time a foreign investor was allowed to acquire an Indian bank since the time ownership norms were tweaked in May 2017.

“The large shareholders in Yes Bank are mostly those who operate and promote their own banks separately. So, they would be more concerned about the liquidity and growth of their own banks rather than Yes Bank," said the first person.

latest research reports on yes bank

He said bringing in a new promoter will ensure better liquidity for Yes Bank and enhance its ability to access enough growth capital for faster expansion.

"If you want banks to be strongly capitalized, then there has to be a strong investor. Then only we can ensure that capital will be available. If it is a widely distributed holding, then when there is a need for capital, who will put it? Only strategic investors will come forward. A widely distributed investor will not come in," a former RBI official said on condition of anonymity.

Under special circumstances

India allows a promoter to hold up to 26% in a private bank, but RBI may allow a higher shareholding under special circumstances such as relinquishment by existing promoters, supervisory intervention, reconstruction/restructuring of banks, entrenchment of existing promoters or any other action in the interest of the bank. The deal may involve a share swap in case of a merger with a domestic bank.

"All you have is a network and a good IT system in Yes Bank. The bank is not there in a single product. The investor will have to put in ₹ 45,000 crore and then have to put in growth capital. Who has got the appetite to put in $7-8 billion in India?," a top private sector banker said on condition of anonymity.

The first person said some of the potential foreign suitors of Yes Bank want a special exemption on promoter holding since some of its loans are still viewed with scepticism in terms of the profile of the borrowers, especially in the corporate banking portfolio. This portion, however, has a lower share than retail and small business borrowers.

Yes Bank’s total loans stood at ₹ 2.28 trillion at the end of FY24. Of this, the share of retail and SME advances was 61.6%, while mid-corporates accounted for 15% and corporate advances stood at 23%.

Also read | Yes Bank, IDFC First Bank seek to revive corporate lending

The first person said RBI is considering the exemption to encourage potential buyers to put in enough capital to help it grow faster.

According to the two persons, financial entities including Japan’s Sumitomo Mitsui, MUFG group, Mizuho Bank and West Asia’s First Abu Dhabi Bank are circling Yes Bank.

Emails sent to Yes Bank, SBI, RBI remained unanswered. Mitsui Sumitomo, MUFG, Mizuho and First Abu Dhabi Bank also did not respond to queries till press time.

Yes Bank shares closed 3.53% down at ₹ 25.69 on BSE on Monday, clocking a market capitalization of ₹ 80,502 crore, a day when most of the banking stocks fell.

Fortunes may change

If a new owner takes reins of Yes Bank, the lender may emerge as an aggressive private bank with better pricing of banking products and services for the borrowers.

In March 2020, the regulator seized control of Yes Bank from its board led by founder-chairman Rana Kapoor, after its gross bad loans ballooned to 16.8% and its liquidity coverage ratio (LCR)—essentially the bank’s ability to meet immediate short-term repayments—fell to as low as 37% of the total cash outflow over the next 30 days. 

RBI then brought in SBI, LIC and other banks to join as Yes Bank’s shareholders and help it stay afloat.

SBI initially owned around 49% in Yes Bank, but after a ₹ 24,000 crore fund-raising, its stake fell to 26.13% in 2022. The bank was required to maintain a stake of at least 26% in Yes Bank for three year, which ended in March 2023.

On 14 March, Mint was the first to report that Yes Bank was looking for a new promoter to sell up to 51% stake, and had hired Citigroup’s India unit to find a buyer.

Yes Bank’s deposit base has swelled from ₹ 1 trillion in March 2020, when RBI superseded its board to over ₹ 2.66 trillion now. Profits and net interest margin have improved since the ownership change. In FY24, the bank posted a 74.4% year-on-year jump in net profit at ₹ 1,251 crore. The bank’s NIM was at 2.4%, better than in previous quarters.

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Yes Bank Ltd Research Report Update

  • SECTOR : Banks
  • BSE : 532648
  • NSE : YESBANK

Chg: 0.22 (0.88 %)

Entry Price

Recommend date.

Asset quality troubles & limited growth capital pose headwinds for banks future earnings. Also banks higher requirement for capital would entail huge dilutions leading to subdued return ratios for reasonable period. We thereby assign REDUCE rating.

Copyright© 2022. All rights Reserved. ICICI Securities Ltd. ®trademark registration in respect of the concerned mark has been applied for by ICICI Bank Limited

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latest research reports on yes bank

Explained: Why Yes Bank shares gained 8% to hit Rs 27

Yes bank shares rose 8.45% to hit a high of rs 27.08 on thursday. later, the stock was trading at rs 26.07, still up 4.45%..

Listen to Story

latest research reports on yes bank

  • Yes Bank shares rose over 8% after Moody's improved outlook
  • Moody's expects gradual improvement in profitability
  • First Abu Dhabi Bank may bid for 51% stake in Yes Bank

Shares of private lender Yes Bank climbed over 8% in Thursday's trade after ratings agency Moody's improved its rating outlook.

This positive outlook comes with expectations of a gradual improvement in Yes Bank's depositor base and lending franchise, which is anticipated to enhance its core profitability over the next 12-18 months.

Moody's mentioned that their positive outlook considers the improvement in Yes Bank's asset quality and capitalisation over the past 2-3 years.

However, it is somewhat offset by the bank's weak core profitability, which is affected by high funding costs and the pressure of meeting priority sector lending (PSL) targets.

Moody's said, "We expect Yes Bank's core profitability, which is measured by pre-provisioning profits to total assets, will gradually improve to above 1.2% over the next 12-18 months from 0.8% in the financial year ended March 2024 (fiscal 2024). An improvement in Yes Bank's ability to meet the central bank's PSL rules through new lending from its branches will help reduce operating expenses for meeting the targets, improving its overall profitability."

On the BSE, Yes Bank shares rose 8.45% to hit a high of Rs 27.08. Later, the stock was trading at Rs 26.07, still up 4.45%.

Moody's also highlighted Yes Bank's focus on higher-yielding, although higher-risk, retail and small and medium enterprise segments, which will help widen its net interest margins.

"A gradual increase in the bank's credit costs will be largely offset by recoveries from its legacy stressed assets, given the high loan loss provision coverage of those assets. Despite these improvements, Yes Bank's profitability will remain weak compared with the Indian peers we rate and a key drag on further improvements to its credit profile," it added.

A report by Bloomberg suggested that First Abu Dhabi Bank PJSC is among potential suitors for a roughly $5 billion stake in Yes Bank. The Middle Eastern lender is considering a bid for as much as a 51% stake in India's private lender, as mentioned in the report.

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The downslide, the takeover and what's next what's in store for yes bank now.

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YES Bank has been in talks with investors over the past year, but failed to come up with a plan.

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Rana Kapoor: A veteran banker who never said no to risky loans

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  • As the per the RBI order, Yes Bank will now be allowed to repay loans or advances granted against government securities or other securities to the bank by RBI or by any other bank and remaining unpaid as of Thursday.
  • It would also be allowed to operate its account with RBI.
  • Depositors will be restricted to a maximum withdrawal of Rs 50,000 even if they have multiple accounts

latest research reports on yes bank

View: YES Bank's bonfire of insanity was left to burn

  • Drafts and pay orders issued so far will be paid in full, it said.
  • RBI will, however, relax the withdrawal limit in the event of medical emergencies, higher education fees or marriage expenses — up to a cap of Rs 5 lakh.
  • RBI assured depositors of the bank that their interests will be fully protected and there is no need to panic.

YES-snip-3

PMC redux: If you are a YES Bank depositor, what should you do?

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RBI supersedes board of Yes Bank, caps withdrawals at Rs 50,000

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Yes bank’s $5 billion stake said to attract lenders from the middle east, japan.

(Bloomberg) -- First Abu Dhabi Bank PJSC is among potential suitors for a roughly $5 billion stake in India’s Yes Bank Ltd., according to people with knowledge of the matter.

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The Middle Eastern lender is weighing a bid for as much as a 51% stake in Yes Bank, the people said, asking not to be identified as the deliberations are private. The stake sale has also drawn preliminary interest from Japan, including Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., although it remains unclear how strong their appetite for a deal is and whether they will proceed, the people said.

Yes Bank shares jumped as much as 8.5% on Thursday, the biggest intraday gain in almost a week. The stock has climbed about 25% this year, giving the Mumbai-based lender a market value of $10 billion.

Considerations are ongoing and the potential size of the stake sale could change, the people said. The banks may also decide against pursuing a deal or some could consider other investment options, the people said.

First Abu Dhabi Bank “categorically states that it is not evaluating any possible offer for a stake in Yes Bank,” the lender said on a statement on Thursday. MUFG and SMFG declined to comment. A representative for Yes Bank didn’t immediately respond to a request seeking comment.

Yes Bank said this week it hasn’t received any in-principle approval from the Reserve Bank of India for a 51% stake sale.

State Bank of India has pared its holding in Yes Bank after rescuing the lender four years ago when it was inundated with bad loans. It remains its biggest shareholder with a 24% stake. SBI’s chairman Dinesh Khara’s tenure is due to end in August, potentially delaying a deal involving Yes Bank. A government-appointed panel has recommended he be replaced by Challa Sreenivasulu Setty.

Share sales, mergers and acquisitions and other dealmaking is on the rise in India as global investors seek to tap into the country’s rapid economic growth.

Middle Eastern banks like FAB are casting overseas for expansion opportunities, with lenders in Turkey and Egypt among its targets, as well Standard Chartered Plc.

Japan’s biggest lenders have been scouring for deals to boost their lending revenues and build out their investment banking operations. MUFG has been eyeing a minority stake in HDFC Bank Ltd.’s consumer lending unit, Bloomberg News has reported.

--With assistance from Ashutosh Joshi, Manuel Baigorri, Joyce Koh, Hideki Suzuki, Taro Fuse, Taiga Uranaka and Nicolas Parasie.

(Adds comment from First Abu Dhabi Bank in fifth paragraph.)

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latest research reports on yes bank

Yes Bank’s $5 Billion Stake Is Said to Draw Global Lenders (2)

By Baiju Kalesh, Preeti Singh and Saikat Das

Baiju Kalesh

First Abu Dhabi Bank PJSC is among potential suitors for a roughly $5 billion stake in India’s Yes Bank Ltd. , according to people with knowledge of the matter.

The Middle Eastern lender is weighing a bid for as much as a 51% stake in Yes Bank, the people said, asking not to be identified as the deliberations are private. The stake sale has also drawn preliminary interest from Japan, including Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. , although it remains unclear how strong their appetite for a deal is and whether they will proceed, ...

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  • SECTOR : BANKING AND FINANCE
  • INDUSTRY : BANKS
  • YES BANK LTD.

YES Bank Ltd.

NSE: YESBANK | BSE: 532648

Turnaround Potential

25.17 -0.58 ( -2.25 %)

60.32% Gain from 52W Low

123.9M NSE+BSE Volume

NSE 19 Jul, 2024 1:24 PM (IST)

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Operating Revenue TTM

Above industry Median

Net profit TTM

Below industry Median

Net Profit Margin TTM %

Revenue Growth (TTM)

Low in industry

Net Profit TTM Growth %

High in industry

YES Bank Ltd. Annual Reports

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COMMENTS

  1. YES Bank Ltd. Brokerage/Research Reports, analyst Research Reports

    See 4 recent research reports for YESBANK, BSE:532648 YES Bank Ltd. from 2 source(s) with an average share price target of 18. ... Yes Bank Ltd. (YBL), a new generation private sector bank, was incorporated in November 2003 by Mr. Rana Kapoor and Mr. Ashok Kapur. However, the RBI superseded the Board of Directors of the bank and imposed a ...

  2. YES Bank Ltd.

    Yes Bank (YES) has reported in-line Q4FY24 PAT of INR 4.5bn, with RoA rising to 0.5%. Loan growth was healthy at 5% QoQ but deposits growth was strong at 10% QoQ. Stock of net NPA and net SR improved sharply to 1.1% vs 1.7% QoQ and 2.4% YoY. FII/FPI have increased holdings from 22.01% to 27.08% in Jun 2024 qtr.

  3. Research & Initiatives Important Banking Reports at YES BANK

    Research Reports Latest research and initiatives from YES BANK includes important case studies, publications and articles. Read here. KNOWLEDGE REPORTS. Invaluable and In depth insights across sectors. ... Download iris by YES BANK The next-gen mobile banking app. Customer Care. Toll Free: 1800 1200

  4. Stock Research Report for Yes Bank Ltd

    Stock Research Report for Yes Bank Ltd. ... Refinitiv). Get detailed report on Yes Bank Ltd by subscribing to ETPrime. Get 4000+ Stock Reports worth₹ 1,499* with ETPrime at no extra cost for you. View ETPrime Plans *As per competitive benchmarking of annual price. ... Find new Trading ideas. with weekly updated scores and analysts forecasts ...

  5. Yes Bank Ltd 19061

    Yes Bank is a private sector bank in India with a balance sheet size of ₹ 3.4 lakh crore as on December 2022. As a part of RBI's Reconstruction Scheme 2020, State Bank of India initially infused capital of ₹6050 crore for a ~48% stake in Yes Bank. Under this scheme, the minimum price was ₹10 per share and it also contained a lock-in ...

  6. Yes Bank Q4 Results: Net profit jumps 123% Y-o-Y to ₹452 crore ...

    YES Bank's Q4 FY24 Highlights: Net profit soared by 123% Y-o-Y to ₹452 crore, surpassing expectations. NIM held steady at 2.4%, with strong growth in non-interest income and robust ...

  7. RBI gives the green light to sale of up to 51% stake in Yes Bank: Report

    The RBI recently gave a preliminary nod to Yes Bank and its key shareholders. This decision is notable as the RBI typically limits promoter holding in domestic banks to 26 percent, the report said.

  8. Four years since Yes Bank's rescue, RBI greenlights an exit plan for

    The Reserve Bank of India (RBI) has okayed the sale of up to 51% stake in Yes Bank, setting the stage for a new owner for the private lender that survived a near-death experience just four years ago.

  9. Yes Bank's $5 Billion Stake Said to Attract Lenders From the Middle

    First Abu Dhabi Bank PJSC is among potential suitors for a roughly $5 billion stake in India's Yes Bank Ltd., according to people with knowledge of the matter.. The Middle Eastern lender is ...

  10. Yes Bank Ltd Research Report Update

    Get Yes Bank Ltd, latest stock/share price quote, and fundamental stock ananlysis and reseaech report by industry expert. Visit ICICIdirect to know more! ... Yes Bank Ltd Research Report Update. SECTOR : Banks ; BSE : 532648 ; NSE : YESBANK ; 23.95. Chg: -0.11 (-0.46 %) Our View reduce. Entry Price 83.00. Target 75.00. Recommend Date 05-08-2019 .

  11. Yes Bank Quarterly Results, Yes Bank Financial Statement ...

    Get Yes Bank latest Quarterly Results, Financial Statements and Yes Bank detailed profit and loss accounts. ... RBI gives the green light to sale of up to 51% stake in Yes Bank: Report. 27.01.2024 ...

  12. Equity Research

    Equity Research: Get latest and breaking news on Yes Bank*, analysis report and updates on Yes Bank* records and recommendation, companies, and business sector India & Worldwide online at ...

  13. YES Bank News

    11 Jul 2024, 10:34AM IST. First Abu Dhabi Bank clarified it is not considering a stake in Yes Bank, contrary to media reports. Bloomberg had reported potential suitors, including Japanese firms, evaluating a $5 billion stake. Following the news, Yes Bank shares rose 8.5%.

  14. Explained: Why Yes Bank shares gained 8% to hit Rs 27

    An improvement in Yes Bank's ability to meet the central bank's PSL rules through new lending from its branches will help reduce operating expenses for meeting the targets, improving its overall profitability." On the BSE, Yes Bank shares rose 8.45% to hit a high of Rs 27.08. Later, the stock was trading at Rs 26.07, still up 4.45%.

  15. Yes Bank Limited (YESBANK.NS)

    1,577.30. -0.28%. Find the latest Yes Bank Limited (YESBANK.NS) stock quote, history, news and other vital information to help you with your stock trading and investing.

  16. Yes Bank Ltd.

    Get Yes Bank Ltd. share price today, stock analysis, stock rating, price valuation, performance, fundamentals, market cap, shareholding, and financial report.

  17. YESBANK

    View the latest Yes Bank Ltd. (YESBANK) stock price, news, historical charts, analyst ratings and financial information from WSJ.

  18. Yes Bank: The downslide, the takeover and what's next? What's in store

    "The cost of not bailing out Yes Bank for the economy and banking system is far higher than bailing out and hence under the current circumstances this looks to be the only option as investor interest in the stock is very low," Macquarie Research said in a note. YES Bank is yet to announce its December quarter earnings.

  19. (PDF) Yes Bank Crisis- A Critical Analysis on Causes, Effects

    Yes Bank Ltd. (YBL) is a new a ge private. sector bank incorporated in the month of. November 2003. It was founded by Mr. Rana Kapoor and late Mr. Ashok Kapoor. With effect from March 01, 2019,Mr ...

  20. Yes Bank's $5 Billion Stake Said to Attract Lenders From the Middle

    (Bloomberg) -- First Abu Dhabi Bank PJSC is among potential suitors for a roughly $5 billion stake in India's Yes Bank Ltd., according to people with knowledge of the matter.Most Read from ...

  21. Yes Bank's $5 Billion Stake Is Said to Draw Global Lenders (2)

    First Abu Dhabi Bank PJSC is among potential suitors for a roughly $5 billion stake in India's Yes Bank Ltd., according to people with knowledge of the matter.. The Middle Eastern lender is weighing a bid for as much as a 51% stake in Yes Bank, the people said, asking not to be identified as the deliberations are private.

  22. YES Bank Ltd. Brokerage/Research Reports, analyst Research ...

    See 6 recent research reports for YESBANK, BSE:532648 YES Bank Ltd. from 3 source(s) with an average share price target of 15.

  23. Yes Bank: Business Responsibility and Sustainability ...

    Yes Bank: Business Responsibility and Sustainability Reporting (BRSR) 14-Jul-2023 Yes Bank. ... Ask Value Research . In these short videos published on a daily basis, Value Research CEO Dhirendra Kumar answers readers' questions on saving and investing. ... Special Report . Catch the latest webinars and updates on new issues here. IPO Analysis .

  24. YES Bank Ltd. Brokerage/Research Reports, analyst Research Reports

    YES Bank Ltd. share price target. YES Bank Ltd. has an average target of 14.50. The consensus estimate represents a downside of -40.21% from the last price of 24.25. View 4 reports from 2 analysts offering long-term price targets for YES Bank Ltd.. Reco - This broker has downgraded this stock from it's previous report.

  25. Homepage

    Latest updates, breaking news, press releases, and in-depth coverage of press conferences and meetings. ... Research tools Button collapse . 2023; Field Missions Dashboard; 2022; Women and Peace and Security Dashboard ... Reports of the Secretary-General; Reports of the Security Council Missions;

  26. Yes Bank News: Latest News Updates on Yes Bank, Yes Bank Results News

    Get latest Yes Bank News/Updates and Results/Analysis. Also get Yes Bank Share/Stock detailed Information on Yes Bank along with top stories and articles on Yes Bank during last 6 months.

  27. See YES Bank Ltd.

    See recent and get customized YES Bank Ltd. (YESBANK/532648) alerts for price change, SMA crossovers, high volumes and new research report available. Configure your own alerts in a snap and get them daily in your email for free. ... YES Bank Ltd. Price Alerts, Volume, SMA/EMA, and new research reports alerts. Get real time alert for YES Bank ...

  28. YES Bank Ltd. Annual Reports

    Net Profit Margin TTM %. 21.6. Revenue Growth (TTM) Low in industry. 74.7. Net Profit TTM Growth %. High in industry. Rating Upgrade. Moody's upgrades its outlook on YES Bank to 'positive'; expects stronger depositor base & lending See details.