Is SBI really buying Yes Bank? India’s largest PSU bank clarifies stand

SBI shares are trading about 2.4% higher at Rs 328 on BSE. Image: PTI

Even as rumours of India’s largest lender SBI being asked to take over loss-making private sector lender YES Bank continue to abound, Prashant Kumar, CFO of SBI has denied such reports. “There is no truth in reports that SBI will be asked to take over YES Bank or any other weak private sector bank,” Prashant Kumar said in an interview to CNBC TV18. SBI shares are trading about 2.4% higher at Rs 328 on BSE. The clarifications of SBI not taking over Yes Bank even as the latter has announced mega $2 billion fund raising plans. Yes Bank’s Board of Directors will finalize and approve the details of the preferential allotment and convene an extraordinary general meeting subsequently, to obtain the approval of the shareholders for raising capital, at its meeting scheduled for today.

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Rumours were rife that the regulator may ask SBI to take over the loss making private sector lender. In the latest quarter, Yes Bank has reported a loss of Rs 600.08 crore on the back of a one-off DTA adjustment of Rs 709 crore on account of change in corporate tax rate regime. Excluding this one-time hit, adjusted profit was Rs 109 crore, Yes Bank said in a statement. This was the second biggest quarterly loss reported by the bank since its listing after Rs 1,506.60 crore loss in March quarter this year. The Gross non-performing assets (GNPA) for the quarter jumped to 7.39 per cent from 5.01 per cent in the June quarter and 1.6 per cent in the year-ago period.

Meanwhile, Moody’s Investors Service downgraded Yes Bank credit ratings due to stressed assets and low loss absorbing buffers against those assets. It also assigned a negative outlook to the company. Moody’s downgraded Yes Bank’s long-term foreign currency rating from “Ba3” to “B2. ”The firm noted that potentially stressed assets and low loss-absorbing buffers may add pressure to Yes Bank’s funding and liquidity. This may create additional risks to its standalone credit profile.

Yes Bank has announced mega plans to to raise up to $2 billion in capital. The bank had informed exchanges on Friday that it is in discussions with the family office of Canadian businessman Erwin Singh Braich, who has expressed interest in investing up to $1.2 billion in the bank. Further, ace investor Rakesh Jhunjhunwala’s wife Rekha Jhunjhunwala’s has also expressed interest to invest up to $25 million in the bank. Family office of Citax Holdings Ltd & Citax Investment Group are also looking to put in $500 million in the bank. Aditya Birla Family Office and GMR Group and Associates have also expressed their interest to invest $50 million each. A Top Tier US Fund House– Capital International has also shown interest to invest around $120 million in the lender. Discovery Capital ($ 50 million), and Ward Ferry ($30 million) were also among interested investors, according to a statement by Yes Bank.