Mumbai: Dutch bank Rabobank International Holding BV plans to sell its 15.9% stake in Yes Bank Ltd, two investment bankers familiar with the development said.
The 110-year-old food and agriculture bank, which has a triple-A rating, may exit Yes Bank because it wants to open a branch in India. Under Indian banking regulations, a foreign bank that holds a stake in a domestic bank cannot simultaneously operate a branch network in the country.
Investment decision: Yes Bank CEO and MD Rana Kapoor. Kaushik Chakravorty / Mint
Yes Bank was promoted by two professionals—chief executive officer and managing director Rana Kapoor and Ashok Kapur, the then chairman who later died. Rabobank currently operates in India through Rabo India Finance Ltd, a non-banking financial company (NBFC).
Rabobank initially owned a 20% stake in the new generation private sector bank, but its stake fell to 15.9% after Yes Bank raised capital from the market and other investors. It has one director on the bank’s board, Sipko Schat.
Among the promoters, Kapoor now holds a 5.89% stake in the bank and Madhu Kapur, wife of the late Kapur, owns 10.34%.
The Reserve Bank of India (RBI) gave a licence to Yes Bank in May 2004 and the Dutch bank had committed to remain invested in the lender for at least five years. It has been free to sell its stake since March 2009.
According to the investment bankers, Rabobank has already started negotiations with investors to sell its stake, but it may take some time for a deal to be concluded. The sale may also take place in phases as it will involve more than one investor.
Since RBI’s norms do not allow a single entity to hold more than 5% and a group more than 10% in a bank, Rabobank will not be able to sell its stake to a single entity.
“I am unable to comment on this issue,” Kapoor told Mint in an email response. “Rabobank as a financial investor in Yes Bank has the prerogative to respond to their investment in Yes Bank. Please be in contact with them.”
Lim Tai Djoe, corporate communications manager for Asia at Rabobank International, said in response to an email query that the bank never comments “on this kind of questions and rumour in the market”.
Yes Bank shares rose 4.16% to close at Rs295.50 apiece on the Bombay Stock Exchange on Thursday.
In January, the bank had raised Rs1,033 crore through a qualified institutional placement, which led to an equity dilution of 11.3%.
The bank had a capital adequacy ratio of 20.6% as of 31 March and an asset base of Rs36,382.5 crore. It posted a net profit of Rs477.7 crore for the fiscal ended March.
“Rabobank can enter India as a bank through the direct branch banking route, but the regulator has put a condition that it would be allowed to open a branch only if it sells its stake in Yes Bank,” one of the investment bankers said.
RBI did not respond to a query from Mint.
The Indian central bank will allow new players, including NBFCs, to set up commercial banks, but it is unlikely that a foreign-owned NBFC will be allowed to do so. Rabobank, however, can always enter India through the branch route.