Yes Bank Ltd.plans to raise $1.2 billion over 18 months to bolster its capital buffer through a mix of public and private share sales, Chief Executive Officer Ravneet Gill said.
“The number one priority would be raising capital," Gill said in an interview on Monday, adding that the infusion would take place in two almost equal tranches with the first likely by the end of September. “Effectively, what we need is growth capital."
Gill took over in March pledging to improve transparency after his predecessor, founder Rana Kapoor, was forced out by the central bank for inadequate disclosure of stressed loans. The new chief has had a tough ride as rising bad debts and an unexpected loss sent the stock down about 57% this quarter, the worst performance among major Indian banks.
India’s shadow banking woes that emerged last September has revealed cracks in Yes Bank’s balance sheet. The country’s fourth-largest private-sector bank has been punished by investors for its exposure to stressed firms including tycoon Anil Ambani’s shadow banking units and Dewan Housing Finance Corp. — companies at the heart of the unfolding crisis.
Yes Bank expects to recover loans made to Dewan as well as Anil Ambani’s companies and Essel Group by the end of September, Gill said on Monday.
Read how India’s shadow banking crisis risks a bad-loan redux
Analysts have been downgrading Yes Bank’s stock on concerns over the extent of further deterioration in asset quality and lingering worries over corporate governance after the exit of several of its board members. The proportion of “sell" calls on the stock has reached the highest in nearly a decade, according to data compiled by Bloomberg.
UBS Group AG cut Yes Bank’s price target last week on concerns over its relatively high exposure to junk-rated companies. Credit Suisse Group AG said in April that the bank was among lenders most-exposed to a few large companies with stressed debt.
Moody’s Investors Service this month warned of a potential downgrade on Yes Bank’s credit rating, citing its “sizeable exposure" to weaker companies in the shadow banking sector.
The bank’s capital buffers have declined sharply as bad-loan provisioning surged, constraining its ability to extend credit. Yes Bank’s core equity capital ratio fell to 8.4% as of March 31, the lowest among the top five private-sector lenders in the country, from 9.7% a year earlier.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.