Govt approves SBI's plan to buy Yes Bank stake: Report
Cash-starved Yes Bank may be rescued by country's largest lender State Bank of India-led consortium as reports suggest that the government has approved a plan in this regard to save the bank from sinking. SBI Bank, a public sector bank has also been authorised to pick other members of the consortium.
As per reports. SBI would soon start the process to identify other members of the consortium before a bid is made to take over the ailing bank. Despite attempts, SBI chairman Rajnish Kumar was unavailable for comments.
Following the development, YES Bank scrips jumped 25.77 per cent (at 11.52 a.m.) to hit a high of Rs 36.85 a share. Shares of state-run SBI fell 0.09 per cent to Rs 285.05 per share.
Meanwhile, the Stock exchange has sought clarification from Yes Bank on the news of Government approving a plan to allow a SBI-led consortium to buy a stake in the private lender.
The Exchange has sought clarification from Yes Bank on March 5, 2020, with reference to news flashed on Bloomberg dated March 05, 2020 quoting "Government is said to have approved @TheOfficialSBI's plan to buy stake in @YESBANK, said to ask SBI to form consortium for Yes Bank stake", Yes Bank said in a filing. "Reply is awaited", BSE said.
Earlier, in January, SBI chairman had suggested that some solution would be found to bail out the private lender.
YES Bank has struggled to raise capital it desperately needs to stay above regulatory requirements as it battles high levels of bad loans due to its exposure to troubled sectors. The lender has been trying to raise $2 billion in fresh capital for two quarters.
Reports earlier indicated that the Hinduja Group with private equity firm Cerberus Capital Management LP is seeking to pick up a stake in embattled Yes Bank. However, both Yes Bank and Hinduja Group have not disclosed any information regarding the same.
The fourth-largest private lender had earlier said it has delayed its third-quarter earnings as the bank is reviewing non-binding expressions of interest from four investors.
In a filing to the BSE earlier, the bank has said it received non-binding expressions of interest (EoIs) from several investors including J.C. Flowers & Co, Tilden Park Capital Management, OHA (UK) LLP (part of Oak Hill Advisors), and Silver Point Capital.
Yes Bank has borne the brunt of several rating downgrades due to the uncertainty over its capital infusion plan. A number of rating firms have red-flagged the bank's exposure to stressed projects too.
Rating agency ICRA noted that Yes Bank's solvency profile remains weak with net NPA/CET of 36 per cent as on September 30, 2019.
Owing to uncertainty over its future, Yes Bank, once billed as a favourite of traders, has gained the reputation of being one of the biggest wealth destroyers in the market.
(With inputs form agencies)
Also Read: Yes Bank crisis: Here's what SBI chairman Rajnish Kumar has to say