Yes Bank loses US$3.1b in value as CEO’s term reduced

MUMBAI: Indian private sector lender Yes Bank Ltd’s shares tumbled nearly a third yesterday, wiping as much as US$3.1 billion (RM12.8 billion) off its market value, after the central bank reduced chief executive officer Rana Kapoor’s term, creating uncertainty about its outlook.

The Reserve Bank of India (RBI) said late on Wednesday Kapoor could serve as the lender’s chief executive only till January 31 next year.

Kapoor co-founded the bank and has been instrumental in its rise to become India’s fifthlargest private sector bank with assets of US$43.19 billion.

RBI’s move came after Yes Bank’s shareholders voted in June to extend Kapoor’s term as CEO and managing director for three years, pending central bank approval.

Yes Bank shares sank as much as 31.7 per cent to 287.30 rupees (RM16.44) yesterday, with more than 158 million shares changing hands. They cut their losses to be down 20 per cent by late morning.

Before yesterday’s trading, at least two brokerages downgraded the stock, citing uncertainty and doubts in investors’ minds about the bank’s future.

Nomura analysts said a need to raise growth capital in troubled times, investor doubts about asset quality and the RBI’s concerns for Kapoor continuing in his position could weigh on the stock.