BackTimeline: Yes Bank’s tussle with RBI & the stormy aftermath
The developments since 19 November have knocked off about 34,500 crore ($4.95 billion) from Yes Bank market capitalization
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Bangaluru: Yes Bank Ltd, India’s fifth largest private sector lender by assets, has had a rough ride since the Reserve Bank of India trimmed CEO Rana Kapoor term in September. The tiff with RBI has caused several top executives to exit Yes Bank’s board, and prompted rating cuts. The move by the central bank, which has already clamped down on the financial sector due to rising levels of bad loans, has also hit Yes Bank share price hard.
The developments since 19 November have knocked off about ₹ 34,500 crore ($4.95 billion) from the company’s market capitalization, as of Friday’s close.
Here’s a look at how the events panned out:
12 June: Yes Bank shareholders approve CEO Rana Kapoor’s re-appointment as managing director (MD) and CEO for three years from 1 September.
30 August: Yes Bank gets RBI’s nod for Kapoor to continue as MD and CEO till further notice from the central bank.
19 September: RBI cuts short Kapoor’s term till 31 January 2019.
21 September: On the first day of trade after RBI’s announcement, Yes Bank shares tank over 30%, and the lender loses as much as $3.1 billion in market value. Market insiders say RBI’s move exemplifies its increasingly assertive approach in tackling the bad debt problem plaguing India’s banking sector.
25 September: Yes Bank board decides to seek RBI’s nod to extend Kapoor’s term until at least 30 April 2019, says it will form a committee to search for Kapoor’s successor.
28 September: Kapoor, in a tweet, says he remains committed to interests of the bank and its stakeholders. He also says he will never sell his promoter shares, but pass them on to his daughters.
■ Ratings firm CARE Ratings Ltd places Yes Bank’s debt instruments under “credit watch with developing implications", citing RBI’s move to restrict Kapoor’s term.
5 October: Yes Bank names T.S. Vijayan, former chairman of IRDAI, and O.P. Bhatt, former chairman of State Bank of India, as external experts of the search and selection committee.
8 October: Yes Bank Ltd’s estranged promoters—Rana Kapoor and Madhu Kapur —have initiated moves to reach an out-of-court settlement, three people close to the development said. Both sides have begun preliminary talks to withdraw a long-drawn and bitter legal case against each other and put an end to their decade-old feud, they said.
11 October: Yes Bank appoints advisory firm Korn Ferry to help find a new CEO.
17 October: RBI refuses to give Rana Kapoor more time at Yes Bank and asks the lender to find a new CEO by 1 February 2019. Yes Bank says it aims to complete the recruitment process by mid-December.
19 November: Yes Bank CEO Rana Kapoor has approached rival promoter Madhu Kapur with a proposal to combine their stakes and form a joint promoter group.
25 October: Yes Bank’s second-quarter profit misses estimates by a wide berth as provisions for bad loans and mark-to-market losses more than double, and asset quality deteriorates. The lender also says it has an exposure to debt-laden Infrastructure Leasing and Financial Services.
26 October: Yes Bank’s CEO search panel finalizes a potential candidate profile. Korn Ferry also shares a list of candidate pool.
12 November: Mint report says Yes Bank sought guidance from RBI on Ashok Chawla continuing as chairman after being named in a corruption chargesheet.
14 November: Ashok Chawla resigns from Yes Bank’s board. Vasant Gujarathi also steps down as independent director.
15 November: O.P. Bhatt resigns as an external expert of the search and selection committee, due to “potential conflict of interest".
19 November: Independent director Rentala Chandrashekhar resigns.
20 November: Yes Bank says that selection process for the MD and CEO is on track, recent resignations of board members bear no impact. Efforts are underway for mutual resolution between Rana Kapoor and Madhu Kapur and her family, the co-promoter. Board now consists of seven members, after addition of Uttam Prakash Agarwal.
26 November: Entities linked to Yes Bank CEO Rana Kapoor pay ₹ 400 crore to two mutual funds from whom they had raised funds by pledging shares, PTI reported.
27 November: Ratings agency Moody’s downgrades the lender’s rating, says the resignations from the bank’s board raise concerns over corporate governance.
RBI is inspecting Yes Bank’s exposure to IL&FS, DHFL, Indiabulls Group, and Sudhir Valia-promoted entities Fortune Financial Services India Ltd and Suraksha ARC, Mint reported.
28 November: Media report says Kapoor’s investment vehicles made transactions that could be questioned by investors and regulators; Yes Bank denies involvement with the fund management of these investment vehicles. ICRA and CARE Ratings downgrade Yes Bank’s debt instruments; ICRA cites corporate governance concerns.
Sources close to Rana Kapoor claim that settlement talks with Madhu Kapur are at an “advanced stage" with the draft consent terms under discussion, but Madhu Kapur’s family maintains that the “discussions are still on".
Yes Bank’s board is due to meet on 13 December to get an update from the search panel on the progress in CEO selection, and to evaluate a new chairman.
29 November: Yes Bank CEO Rana Kapoor wants to be named as the bank’s non-executive chairman once his term ends on 31 January, Mint reported. A PTI report says that’s unlikely.
30 November: Twenty out of 54 analysts covering the Yes Bank stock change their view on Yes Bank after RBI denied an extension for CEO Rana Kapoor, Mint reported.
In another report, Mint says RBI and Yes Bank exchanged at least eight letters related to persistent corporate governance failures at Yes Bank before rejecting a request to extend CEO Rana Kapoor’s tenure.
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