Yes Bank is looking to raise ₹10,000-12,000 crore through a follow-on public offer (FPO), rights issue or qualified institutional placement (QIP), managing director and chief executive Prashant Kumar said.
The private lender will need to raise at least ₹4,000 crore to meet the regulatory capital requirement this year, Kumar said over the phone. In the fiscal fourth quarter, Yes Bank’s tier 1 capital or equity capital dropped to 6.3%, below the mandatory 7%. The bank has taken an enabling resolution to raise ₹15,000 crore this year.
“If the fundraise happens by first quarter, then it is most desirable. It will be dependent on what merchant bankers tell us—it could be FPO, rights issue, a combination of QIP and rights issue. If we are able to raise ₹15,000 crore, then there is no need to come back to market for three years. If we are able to raise ₹10-12,000 crore, then there is no need to come back for two years," said Kumar.
The fundraising is critical for Yes Bank despite equity infusion worth ₹10,000 crore by financial institutions and gains of ₹6,300 crore from the write-downs of additional tier-1 bonds. Yes Bank on Wednesday turned to a net profit of ₹2,629 crore in the three months to March 31, compared with a year-earlier loss of ₹1,507 crore due to income from write-down of additional tier 1 (AT1) bonds. Excluding this item, the bank would have reported a net loss of ₹3,668 crore in the March quarter.
In fiscal 2019-20, the bank reported a loss of ₹22,715 crore which, after adjusting for the AT1 bond write-down, is a net loss of ₹16,418 crore, compared with a year-earlier profit of ₹1,720 crore.
The bank on 14 March had written down AT1 bonds worth ₹8,415 crore as part of the bank’s restructuring scheme. AT1 securities are a type of contingent convertible bonds designed after the global financial crisis that put investors on the hook if a bank runs into financial stress. Once the bonds are written down, the money raised from the issue, net of repayments, is accounted as income in the profit and loss accounts. In the March quarter, Yes Bank’s asset quality deteriorated on a year-on-year basis but improved sequentially. Its bad loans as a percentage of total loans stood at 16.8% in Q4 FY20, up from a mere 3.22% in Q4 FY19 and down from 18.87% in the December quarter. Kumar said the bank is looking to recover bad loans worth ₹5,000-8,000 crore this fiscal year.
“We have created a separate vertical of 100 dedicated executives who are well-versed with NPA (non-performing asset) management which will look at unlocking value from the stressed assets pool. It will also look at segregation of assets to facilitate strategic spin-off of these assets to a separate legal entity or sale to an ARC (asset reconstruction company) at a later stage," he said.
Yes Bank also saw a large outflow in deposits in the March quarter. Deposit growth fell 36% sequentially led by a decline in current accounts by 60% and savings accounts by 40%. Deposits fell from ₹1.37 trillion as of 5 March to ₹1.05 trillion as of 31 March.