No overdue obligations from customers: Yes Bank

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No overdue obligations from customers: Yes Bank

Rana Kapoor, MD and CEO of Yes Bank, said they have no overdue obligations from customers. He also said that forex derivative exposures are fully under control. Yes Bank's credit limits to all customers are within prudential limits. Bear Stearns is not an active shareholder, he told CNBC-TV18.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Forex battle in court: Is arbitration the solution? $-Yen slump a sign of panic, risk aversion in mkts: SCB India’s growth slowdown a temporary aberration: Bankers Large institutions eyeing non-US mkts now: Kotak Mah Bk JPMorgan Chase buys Bear Stearns for about $2/sh YES BANK BSE | NSE 25/05/12 Are Mutual Funds betting on YES BANK?

Rana Kapoor, MD and CEO of Yes Bank, said they have no overdue obligations from customers and no customer disowning obligations. He also said that forex derivative exposures are fully under control.

Yes Bank's credit limits to all customers are within prudential limits. Bear Stearns is not an active shareholder, he said.

A: As you know, I have made a release today to the exchanges, confirming that we do not have any uncovered foreign exchange exposures for our own account and our client positions are absolutely and fully in control in respect of any mark-to-market exposures on our clients. We have no overdue obligations and in fact all maturing obligations of all clients are being fully met. There has been some fluctuation in currencies, particularly in the Euro and the Yen, and the Swiss Franc. But I believe that these are extraordinary currency movements which are being harnessed, and clients are paying up, we have had almost Rs 150 crore of mark-to-markets (MTMs) being reduced over the last two months, and I am pleased to confirm that our financial performance continues unabated. We will be fully consistent with our numbers as in the preceeding 9 months when we recorded an increase of over 110%, over the corresponding period.

Q: There has been some lingering fear or suspicion that maybe some of your smaller clients, the SME segments, will get into trouble in Forex transactions and eventually they could default as well. Is that a legitimate fear? If it's not happened today, do you expect any thing like that to happen going forward?

A: We are relatively younger bank. We have been through a customer base with a fine tooth-comb. We are pleased to confirm that not a single one is disowning their obligations in any respect, these obligations are well within established credit limits which are at prudent levels. We have absolutely no real fears at this stage, the customer recognizes that these are extraordinary markets and by and large, their exposure is fully under control.

A: A derivative or any Forex forward contract is like any other loan or credit product of a bank that the bank offers in the normal course. There are properly established credit exposure limits on the client. There is legally binding ISDA documentation which is something that is globally accepted including with our regulators locally. Further there are confirmations of contracts, the board resolutions, authorized signatories, email confirmations, voice recordings which is the normal way that this business is done; unless the client, as in the specific case you are referring to, wants to renege and use the pretext of a legal action to withdraw from an obligation. But these are few and far apart and completely exceptional to the rule and the onus is entirely on the clients to meet their obligations. At least in our portfolio, we have not had anything unduly concerning in this regard, which is why I made this statement today because of unfounded rumors that have been unfortunately going around in the last few days.

A: By and large if you see, we have the world's only AAA bank, Rabo Bank holding 18% in our bank. We have very valuable investors like Global Orient which have only recently taken a 4.99% stake in the bank at Rs 225 per share, less than 2.5 months ago. We have investors like Swiss Re-insurance which is a highly regarded investor in global markets which holds over 3.5%; in fact they have increased their position in the last few days. Another predominant sovereign fund from Malaysia owns 4.99%, some of our original private equity investors like AIF Capital continue to own over 5.2% in the bank. In fact, we have long investors who are not churning their portfolio and if at all, maybe some retail investors are concerned, which is why I said, we should clarify to our valuable stakeholders that we have no concerns. Our financial results which we will declare in mid-April will more than substantiate and vindicate what I am saying to you today.

A: To the best of my knowledge, there was some technical adjustment that took place yesterday, it may have been Bear Stearns althought they don't appear on our share holder register, they are not there so it may have been a P-Note, so there may have been some churn but Bear Sterns has not been an active share holder in Yes Bank and as I mentioned to you we have some very high-quality share holders but Bear Sterns has not been one of them.