Yes Bank: ICICI Bank, HDFC, Axis Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank Join SBI in Infusing Money for Stake
Private sector lenders ICICI Bank Ltd, Housing Development Finance Corp Ltd (HDFC), Axis Bank Ltd, Kotak Mahindra Bank and Bandhan Bank have decided to join State Bank of India (SBI) in saving crisis-hit Yes Bank Ltd. This is exactly what Moneylife had written on Thursday on the rescue plan for Yes Bank.
 
On Friday, the union cabinet also approved a reconstruction plan for cash-strapped Yes Bank, under which the SBI will pick up 49% of the equity, while private investors will be allowed to buy the rest. According to finance minister Nirmala Sitharaman, once the restructuring scheme is notified, the moratorium on Yes Bank would be lifted at 4pm the same day.  
 
In a regulatory filing, ICICI Bank says its Board has approved to invest up to Rs1,000 crore cash in crisis-hit Yes Bank Ltd. "This investment is likely to result in ICICI Bank holding in excess of 5.0% shareholding in Yes Bank, with the final shareholding to be determined based on the final scheme of reconstruction and share issuance thereunder," the private sector lender added.
 
HDFC in a regulatory filing says that it would invest Rs1,000 crore in Yes Bank for buying 100 crore equity shares in the crisis-hit lender at a price of Rs 10 per equity share.
 
Axis Bank, the third largest private sector lender in India said it would be investing about Rs600 crore for buying up to 60 crore shares in Yes Bank. 
 
Kotak Mahindra Bank also issued a commitment letter to invest Rs500 crore in Yes Bank for buying 50 crore equity shares in the crisis-hit lender.
 
Private sector lender Bandhan Bank has decided to invest Rs300 crore cash for buying up to 30 crore shares in Yes Bank. Federal Bank will also invest Rs300 crore for 30 crore shares in Yes Bank.
 
Similar to SBI, all the private sector lenders are also paying a premium of Rs8 on a share price of Rs2 for buying the 5% stake in Yes Bank. SBI would be investing Rs7,250 crore for buying 725 crore shares of Yes Bank. 
 
On 12 March 2020, Moneylife had published the rescue plan of Yes Bank. "The solution proposed was for State Bank of India (SBI) to lead a rescue with private bankers including ICICI Bank, HDFC Bank, Kotak Bank and others chipping in equity, agreeing to commit funds for at least two years and getting a seat on the board. If they are able to pull it off, we will have a unique new model of resolution," we had mentioned.
 
Meanwhile according to the finance minister, the cabinet decided that the SBI will hold at least 26% stake in Yes Bank for minimum three years. Similarly, other investors will also be mandated to have a similar lock-in period for 75% of their investment in the Yes Bank.
 
The authorised share capital of the Yes Bank will be revised upwards from Rs1,100 crore to Rs6,200 crore.
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    COMMENTS

    samyukta.babu

    4 months ago

    I fail to understand why such an immediate reaction to save Yes Bank? Is there something that is not visible to the naked eye? How long will this Band-Aid solution work? Does this mean that if there are similar banking scams in the future, we can expect a similar reaction? Being a woman, I am sorry to use this analogy - but it is like letting the rapist go away scot-free so that others can turn rapists emboldened by the support that the former got.
    I am sorry but my heart bleeds at the state of banking in India today.

    Nahom

    4 months ago

    Why did Rana Kapoor and Aditya Puri sell their holding in Yes & HDFC bank resp. Did they knew something which we fools didn't.

    fnetwork

    4 months ago

    That is the problem with India. Its endemic regardless of Party in power. One does not bail out a corrupt bank. One liquidates it. Instead the banking industry - led by the biggest culprit SBI - is primarily interested in "burying the corrupt practices" so that they can start all over again .. UNLESS some of these bankers are stripped of their assets and sent to jail nothing will ever change

    REPLY

    cjninan

    In Reply to fnetwork 4 months ago

    Try and understand that bank is different from other businesses. If you understand this concept you wont be writing this. Sbi axix hdfc and all are not fools. Its because banks cause systemic issues if you liquidate and innocent people lose their deposits. I am sure u know all this but still write whatever u feel. This happens all over the world

    vikram.chin

    In Reply to cjninan 4 months ago

    Ultimately all businesses aim to provide efficient product or service at a profit to customers and all have a balance sheet and P&L. "This business (Banking) is different" is a variation of the argument to have an inefficient govt. run railway, bleeding Air India, coal mining and telecom (when there was only MTNL and BSNL) and a host of business sectors supposedly different and critical to the nation trapped in the structure of a PSU with a balance sheet and P&L not worth the paper it's printed on. It would be better in the long run for everyone and for the govt. to realise that banking is also a business and inefficient businesses should fail soon rather than expand and trap more customers.

    fnetwork

    In Reply to fnetwork 4 months ago

    It isd not sufficient for Modi and ManMohan Singh to say that they are not personally corrupt - only those around them...

    nagaraju2691

    4 months ago

    All banks are doing fraud, now to hide one bank fraud all fraud banks joining together,

    REPLY

    cjninan

    In Reply to nagaraju2691 4 months ago

    Your ignorance is appalling.

    apparaoramam

    4 months ago

    More than two thousand crores were swindled by Mr Rana Kapur founder, chairman of the bank along with his wife and 3 daughters . Reports say that he wanted to escape to other foreign shores after disposing his assets. It attracted huge deposits with glossy advertisements . Why the GOI MF, SBI, ICICI, KOTAK, AXIS BANKS are jumping to save the yes bank with such an alarming speed. What sin the depositors of PMC bank committed. Now a days no news is coming about PMC BANK. It appears that influential politicians and business men are interested in lifting YES bank. All these banks are investing in share capital of the YES bank with premium. These banks are investing whose money, not of their personal money. It is of public money. With the same speed GOI should save F D holders and NCD holders of recent fradulent companies.

    REPLY

    cjninan

    In Reply to apparaoramam 4 months ago

    Govt to save fd and ncd holders ? Huh.

    cjninan

    In Reply to apparaoramam 4 months ago

    Yes bank is a scheduled bank whilst pmc was a co operative bank. Its like asking why usa did not allow citi bank to fail but allowed leman bros to fail. Read about it there is a lot of materials. Even in case of pmc there will be a resolution as the assets of the fraud committors are seized and that is sufficient to settle all dues. Yes bank was 4 th largest bank. And i am sure you did not have deposits with them. If you had it would have been different write up

    glnprasad52

    In Reply to apparaoramam 4 months ago

    if the other vitals are functioning properly and if there is a hope of survival, the patient who is in a coma may be temporarily placed in ICU on a ventilator, what is the use of keeping a chronic patient in an advanced stage in such ICU, when there is no hope of survival and the family can not even foot the medical bills.

    bala.mathur

    In Reply to glnprasad52 4 months ago

    Obviously you know a lot more than us ordinary mortals about ethics and fairness. Unlike the sympathy and charity that is being showered on Yes Bank, PMC Bank Depositors don't need handouts and freebies as they have a clear, legal option before them to retrieve their money stuck in PMC Bank - which is to dispose of HDIL's assets and use the proceeds to repay the depositors.
    But this requires the will of clear thinking people with honesty and integrity who genuinely have the interests of innocent depositors.
    Those type of honest people described above are, in these troubled times, in short supply.

    glnprasad52

    4 months ago

    Wonderful acts of commitment to rescue their competitor. Congratulations to RBI or FM whoever that was behind such an excellent idea. This kindles public confidence on banks. RBI has also asked govt depts not to withdraw their deposits from YB. Good coordination and team spirit, well-planned strategy.

    REPLY

    cjninan

    In Reply to glnprasad52 4 months ago

    One sensible comment. Thank you sir

    PMC bank scam: Ex-director, 2 valuers arrested by Mumbai police
    The Mumbai Police Economic Offences Wing (EOW) has arrested a former director of Punjab and Maharashtra Cooperative (PMC) Bank and two of its valuers in connection with the ongoing probe into the Rs 4,355-crore scam, an official said here on Thursday.
     
    Those arrested are Jasvinder S. Banvait, a former bank director, and valuers Vishwanatha S. Prabhu and Shripad G. Jere from Yardi Prabhu Consultants and Valuers Pvt Ltd.
     
    Banvait was a director-member of Loan, Investment and Executive Committee of the PMC Bank for many years. It is against this background that he was interrogated on the loans extended to HDIL Group, their long-pending dues, and remedial measures initiated to recover or regularise the same.
     
    Prabhu and Jere were charged with complying with the desires of then PMC Bank Chairman Joy Thomas and inflating the valuation of the PMC-owned assets in 2012-2015 to enable maintain the Bank Capital Adequacy Ratio as mandated by the Reserve Bank of India.
     
    The trio were interrogated by the EOW sleuths, and they failed to provide satisfactory or convincing replies, confirming their involvement in the scam, the official claimed.
     
    They have since been remanded in police custody till March 16, said the official.
     
    Earlier, 12 other accused, including top bank officials, HDIL promoters Rakesh Wadhawan and Sarang Wadhawan and others, were arrested in connection with the PMC Bank scam which erupted in late September 2019 and resulted in the deaths of around 10 persons, including depositors.
     
    The bank's aggrieved depositors have been agitating for the past six months to get their stuck money out of the scam-hit bank after the RBI imposed a moratorium on it last September following serious irregularities.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    SBI Board Approves Buying 725 Crore Shares in Yes Bank at Rs10 per share
    State Bank of India (SBI) on Thursday said that its executive committee of central board (ECCB) has approved the purchase of 725 crore shares in Yes Bank at Rs10 per share, or Rs7,250 crore. The share price includes a premium of Rs8 per share. 
     
    In a regulatory filing, SBI, the country's largest lender, says, "Our shareholding in Yes Bank Ltd will remain within 49% of the paid up capital of Yes Bank."
     
    Last week, the Reserve Bank of India superseded the Yes Bank board of directors for 30 days and appointed SBI's former chief financial officer (CFO) Prashant Kumar as the bank's administrator. 
     
    As per RBI's draft reconstruction scheme for Yes Bank, the investor bank (SBI) would agree to invest in the equity of the reconstructed bank to the extent that post infusion it holds 49% shareholding in the reconstructed bank at a price not less than Rs10, comprising of face value of Rs2 and premium of Rs8. 
     
    There will be a chief executive and managing director (CEO & MD), one non-executive chairman and two non-executive directors on the board of Yes Bank. SBI can appoint two nominee directors on the board while RBI may appoint additional directors on Yes Bank. The board can also decide to co-opt more directors.
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    COMMENTS

    col.bogeyrathore

    4 months ago

    since it is internal frad. they shld not hv invested. it shld be taken over.\
    and value will be net worth. which is zero.

    glnprasad52

    4 months ago

    A good move and deserves congratulations after all entire government funds are with the SBI and it is the largest bank that enjoys maximum funds as no-cost deposits. once SBI enters the arena, there may not such R u s h on the bank for the present as it gives confidence to the public. A good tactical strategy by FM.

    rajoluramam

    4 months ago

    In the same fashion, SBI should save
    ILFS, DHFL, ANIL AMBANI, JET AIRWAYS, PMC BANK, COX&KINGS ETC ETC.

    REPLY

    cjninan

    In Reply to rajoluramam 4 months ago

    Understand the difference between a bank and a llc. Then comment

    SKNataraj

    In Reply to rajoluramam 4 months ago

    And HDIL.

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