As the government charts out a revival plan for troubled private sector lender Yes Bank with State Bank of India playing white knight, Moneycontrol's Deputy Editor (Deals) Ashwin Mohan caught up with the man who once occupied centre stage at India's fifth-biggest private lender.
Rana Kapoor was once at the helm of affairs but is now firmly in the background after stepping down.
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Below are edited excerpts of a detailed and exclusive interview with Kapoor, the former MD and CEO of Yes Bank, who also co-founded the institution:
Q: Are you satisfied at the pace with which the government has moved to revive Yes Bank by okaying SBI’s 49 percent investment by pumping in Rs 2,450 crore?
A: I personally believe it's a good clinical move and at least there is a methodology in making sure that the bank has a safe landing and the process and the timelines are well defined. You have a white knight with deep pockets, extremely credible on the back of whom capital raising will become far easier and expeditious. Further, the public trust factor will be more than reinstated and should accelerate back into deposit growth, which is the need of the hour.
Q: Even though the government has moved swiftly, the capital requirements of Yes Bank are much more than what have been announced today. So, do you expect the nuts and bolts to fall in place later with other investors coming on board as part of a consortium and not solely depending on SBI?
A: If there is an incremental preferential issue or a QIP or even for that matter, a rights issue on the back of SBI anchoring the bank going forward … I would reckon that the flood gates for all sources of capital — domestic and overseas — will open up. The institution itself has always attracted all forms of capital in the past via QIP and bonds. I can only speak for my tenure when I left, the total capital funds of the bank were Rs 52,500 crore.
Q: The RBI says it was forced to intervene because despite holding discussions with private equity investors, there was no credible resolution plan that was clinched . Do you regret that a deal did not fructify in the normal course of market action and that the regulators were forced to intervene?
A: The management and the board during the past six seven months tried their best to attract capital and only when they literally ran out of momentum did the situation arise. And therefore in a very timely manner, the RBI has taken this action to make sure that the restructuring of the bank happens to get capital and retain depositors. When you have a strong new promoter in State Bank of India, the borrowers, whose attitude towards Yes Bank was lukewarm, will have to tighten their belts and start paying up. From what I know, lots of borrowers were slackening towards their payments to Yes Bank and they will have to shore up their repayment plans.
Q: What the RBI has done is very rare, especially for a bank the size of Yes Bank. Years ago, the regulator intervened and Global Trust Bank was merged with Oriental Bank of Commerce. But since you have been a co-founder, seen the bank through its initial phase and also through a phase when it was a darling of the domestic stock markets, do you regret that it couldn't rescue itself on its own?
A: I really can’t comment on this issue. Until a year ago, the bank was a blue-blooded private sector player. And it tapped all forms of capital from all segments of investors. So, it is with some regret why they were not able to tap in the last 6-9 months or the last one year and were made to subscribe to an anchor investor in SBI. But we can’t have a better pedigree than SBI in our country. It will help to augment the capital and keep the Yes Bank legacy and story alive. To me, it’s a soft and safe landing for Yes bank, the way things are unfolding.
Q: Since you have stepped down from Yes Bank, what has kept you busy? From managing a bank full time, are there any new avenues that you are looking at professionally?
A: I am catching up on my reading and catching up on precious time with my wife and children, which I couldn’t devote satisfactorily earlier. I don’t think I am doing much other than that.
Q: Now that a plan has been put in place for Yes Bank by the government, what is your message to shareholders of the bank?
A: All I can say is this is Version 4 of Yes Bank. I took the bank through all of Version 1 and Version 2. I could be there only for 80 percent of Version 3. One year and two months less.
Version 4 of Yes Bank will start inherently with strong systems, frugal and highly efficient technology, an outstanding HR of 24,000 people averaging 32 years of age, a brand that still resonates, segment strategy both from risk, industry and geographical standpoint. All of that with a strong owner and leader in SBI will only strengthen the bank and I hope the agility of the bank will be retained and its knowledge banking strategy is retained. The linear direction in which it was working towards building its branch banking, retail banking, MSME and trade finance strategies are core to the business model going forward.
Q: Would you like to address the chatter of you shifting base to London?
A: In 2019, I travelled for two weeks to see my newly-born granddaughter along with my wife and that too four months after she was born. We were away for a short while and we are back. Mumbai is home.
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