YES Bank looking to raise up to ₹12,000 crore, says CEO Kumar

MUMBAI: Private sector lender Yes Bank is looking to raise ₹10,000-12,000 crore through a follow-on public offer, rights issue or qualified institutional placement, managing director and chief executive officer Prashant Kumar said.

The bank will need to raise at least ₹4,000 crore to meet the regulatory capital requirement this year, Kumar said over the phone. During the fourth quarter, YES Bank’s tier 1 capital or equity capital dropped to 6.3%, below the mandatory 8%. The bank has taken an enabling resolution to raise ₹15,000 crore this year.

“If the fund raise 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 fund raising is critical for YES Bank despite equity infusion worth ₹10,000 crore by financial institutions and gains worth ₹6,300 crore from the write-down of additional tier-1 bonds.

On Wednesday, YES Bank reported a net profit of ₹2,629 crore in the three months to March 2020 as against a loss of ₹1,507 crore in the same period

THE BANK HAS TAKEN AN ENABLING RESOLUTION TO RAISE A TOTAL OF ₹15,000 CR THIS YEAR

last year, owing to its income from write-down of additional tier 1 (AT1) bonds. Had it not been for this item, the bank would have reported a net loss of ₹3,668 crore in the March quarter.

For the year 2019-20 as a whole, the bank reported a loss of ₹22,715 crore which, after adjusting for the AT1 bond write-off, is a net loss of ₹16,418 crore, compared with a profit of ₹1,720 crore in the previous year.

On March 14, the bank 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 off, the money raised, net of repayments, is accounted as income in the profit and loss accounts.