BackYes Bank will not be nationalised; SBI board meet concludes
Earlier today, news reports said the government may ask SBI to lead a consortium to buy stake in Yes BankYes Bank has been struggling to find investors to raise funds worth $2 billion despite several efforts
PremiumYes Bank Ltd will not be nationalised under the government’s plan to bail out the private lender with the help of State Bank of India (SBI)-led consortium that would acquire stake in the bank, sources aware of the development said. The SBI-led consortium is unlikely to be part of Yes Bank’s management, they added.
TV reports said SBI's board meeting concluded around 3.30 pm today to approve the stake purchase.
“State Bank will only hold a stake in Yes Bank on a cash-and-carry basis. The existing management of Yes Bank will continue to run the bank. Yes Bank will not be nationalised," one of the persons said.
Earlier today, news reports had said the government may ask SBI to lead a consortium that will buy stake in Yes Bank. The public-sector bank has also been authorised to pick other members of the consortium.
Yes Bank has been struggling to find investors to raise funds worth $2 billion despite several efforts. The bank has been in trouble since its founder and former chief executive officer (CEO) Rana Kapoor was denied extension by the Reserve Bank of India in 2018 owing to corporate governance issues and under-reporting of bad loans.
Kapoor’s term as the bank’s CEO ended in January 2019. Ever since, it has been downhill for the bank, with large bad loans pulling it lower. The bank’s inability to attract a suitor despite a frantic search has only worsened the matters.
Mint was the first to report that the government and RBI were considering all options, including an interim bailout of Yes Bank, in case the proposed fundraising was to get more delayed.
Yes Bank's collapse could have a systemic impact, leading to a domino effect on interlinked financial institutions and impair growth for the banking sector.
In January, SBI's chairman Rajnish Kumar had said Yes Bank "will not be allowed to fail" and that “some solutions will emerge" to steady the private lender. This indicated that something was in the works.
Yes Bank's share value has eroded more than 80% in the past one year due to concerns over its asset quality and uncertainty around its efforts to raise capital for growth purpose. Shares of Yes Bank jumped nearly 25.77% to end at ₹36.85 on the BSE today, while that of SBI settled 1.1% higher at ₹288.30.
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