SBI to pick up 49% in Yes Bank for `2,450 cr
■ RBI comes out with draft scheme to recast bank
The country’s largest lender, State Bank of India (SBI), shall pick up a 49 per cent in the reconstituted Yes Bank, according to a draft scheme placed on Friday by the Reserve Bank of India (RBI) for revival of the beleaguered private lender.
SBI would be infusing Rs 2,450 crore in the troubled lender for the stake. SBI would not be allowed to reduce its holding below 26 per cent before completion of three years from the date of infusion of the capital.
The scheme called ‘Yes Bank Ltd Reconstruction Scheme, 2020’ by the central bank comes a day after it imposed a 30-day moratorium on the lender.
“State Bank of India has expressed its willingness to make investment in Yes Bank Ltd and participate in its reconstruction scheme,” the central bank announced.
The announcement made under section 45 of the Banking Regulation Act, 1949 says that the authorised capital of Yes Bank shall stand altered to Rs 5,000 crore and the number of equity shares
Mumbai, March 6: One of the biggest losers in case the draft restructuring scheme for Yes Bank goes through will be the additional tier-I (AT1) bond holders, who have bets totalling to Rs 10,800 crore on the bank. The investors in such instruments typically include mutual funds and bank treasuries, experts said.
"The instruments qualifying as additional tier-1 capital, issued by Yes Bank under Basel-III framework, shall stand written down permanently, in full, with effect
will stand altered to 2,400 crore, each valuing Rs 2, pushing the total share value aggregate to Rs 4,800 crore.
As per the scheme, all deposits and liabilities of the reconstructed bank, except as provided in the scheme, and the rights, liabilities and obligations of its creditors, will continue in the same manner and with the same terms and conditions, completely unaffected by the scheme, said the central bank. from the appointed date," the draft of the RBI scheme said.
AT1 bonds are designed to absorb losses when a bank's capital falls below a certain level
"This is for the first time in the history of the Indian banking sector that a bank's T1 bonds are being written down at the 'point of non-viability' (PONV) i.e. the investors have to take a hit on both principal and the balance interest payments," Acuite Ratings president Suman Chowdhury said. —FC Bureau
Also, the employment and salary of Yes Bank employees has been assured for one year.
“The Investor bank shall agree to invest in the equity of the reconstructed bank to the extent that post infusion it holds 49 per cent shareholding in the reconstructed bank at a price not less than Rs 10 [face value of Rs 2 and premium of Rs 8]. The investor bank shall not reduce its holding below 26 per cent before completion
RBI governor Shaktikanta Das
of three years from the date of infusion of the capital,” said the draft scheme.
The RBI has invited suggestions and comments from members of the public, including the banks' shareholders, depositors and creditors on the draft scheme. The draft scheme has also been sent to Yes Bank and SBI for their comments. RBI will receive suggestions up to Monday, March 9, and thereafter take a final view, said the central bank in a statement.
The proposed scheme says a new board shall be constituted to replace the administrator appointed by the RBI to run Yes Bank. The new board will have two nominee directors from the SBI, and the RBI may appoint additional directors.