Yes Bank Assures Customers About Its Liquidity And Stability

Yes Bank Ltd. said its financial position is stable and that it has ample liquidity to run operations.

“...it may be noted that the Bank’s overall capital adequacy ratio is comfortably above regulatory requirements and all efforts are being made to financially strengthen the Bank even further,” the private lender said in an exchange filing today.

The bank was responding to press coverage and rumours on social media about its capital position as it has been unable to raise capital for months now. It’s unusual for a bank to assure depositors about its stability.

Yes Bank had disclosed in October 2019 that it had received a binding investment offer worth $1.2 billion from Canadian investor Erwin Singh Braich. On Jan. 10, it, however, said it wouldn’t proceed with the offer.

The bank is still considering a $500 million investment offer from Citax Holdings but its board is yet to complete the necessary formalities to accept this offer. It will be considering the same at its next board meeting.

As on Sept. 30, 2019, the bank’s common equity tier-1 ratio stood at 8.7 percent, slightly above the regulatory requirement of 8 percent. The bank had last raised capital worth about $275 million through a qualified institutional placement in August 2019. A further capital raise would help the bank shield itself against large stressed accounts on its books and fund growth.

An independent director on the lender’s board, Uttam Prakash Agarwal, resigned from his position last week citing corporate governance concerns and Chief Executive Officer Ravneet Gill’s handling of the fundraising process.

Subsequently, the bank informed the exchanges that the Reserve Bank of India had directed it to review Agarwal’s “fit and proper” position. The nomination and remuneration committee of the board was to review the position during the board meeting on Friday, but Agarwal resigned before that.

Yes Bank’s board on Tuesday said it would hold an extraordinary general meeting of its shareholders on Feb. 7 to raise Rs 10,000 crore through various routes, including QIP, American depository receipts and global depository receipts on a private placement basis.