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SBI holds meeting with LIC, may pick 49% stake in Yes Bank

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New Delhi, March 5, 2020 –

The State Bank of India, which held a board meeting on Thursday over its purchase of staks in private lender Yes Bank, will be making an announcement in a day, persons aware of the development said. They also said the Rana Kappor-promoted lender will remain a private sector bank even after the SBI-led consortium’s stake acquisition.

According to sources, the SBI and the LIC will be picking up to 49 per cent stake, on a preferential basis, in the bank, whose share has a face value of Rs 2, at a cumulative amount of Rs 490 crore. Under takeover rules, if any person acquires more than 25 per cent in a listed company, then he has to make an open offer to acquire additional 26 per cent from public shareholders. But there is a possibility of the SBI has been exempted from the open offer.

According to sources, the government has asked the SBI to bail out the private lender with the help of a consortium that would acquire stake in the bank but will not be part of Yes Bank’s management, they added. The SBI board meeting on Thursday was consider the stake purchase and sources said it will only hold stakes as an investor. The existing management of Yes Bank will be there continue to run the bank, a source said.

The announcement can come from Yes Bank as well, said the source.

In its response to the exchanges, SBI said: “We will abide by the timelines under Regulation 30 of SEBI (LODR) Regulations 2015 in disclosing the developments, if any, in the matter to Stock Exchanges.”

Yes Bank has been looking for investors to raise funds worth $2 billion.

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The bank has been in trouble after its founder and former CEO Rana Kapoor was denied extension by the Reserve Bank of India in 2018 owing to corporate governance issues and under-reporting of bad loans.

In its response to BSE and NSE, Yes Bank said: “The Bank has not received any such communication from RBI or any other the Government or Regulatory authorities or from the SBI and we are unaware of any such decision. The Bank in the usual and ordinary course of its business continues to explore various means of raising capital/funds through issuance of securities to diverse set of investors to meet its business/regulatory requirements, subject to compliance with prescribed procedures and receipt of statutory/ regulatory approvals.”

Yes Bank has been struggling to raise money from markets and investors. Its recent board meeting was inconclusive as they still have not firmed up on who could be the potential investors. It has been close to a year since Ravneet Gill took over as the CEO and they have not yet been able to raise money.

Yes Bank’s net worth is around Rs 250 billion below investment grade book (rated BB and below). Macquarie says total capital needed by Yes Bank would be at least about $2.5 billion to $3 billion over the next 12 to 18 months.  (Agency)

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