MC Exclusive | Yes Bank CEO Prashant Kumar says he's not concerned about shareholding change at the bank

Prashant Kumar, MD and CEO, YES BANK

Prashant Kumar, managing director and chief executive officer (MD & CEO) of Yes Bank, said on May 24 that the lender was not concerned about the looming impact of State Bank of India (SBI), its largest shareholder, offloading its stake. He said that whichever stakeholder comes in place of SBI will need to have the approval of the Reserve Bank of India (RBI), and hence will have to go through a rigorous due diligence process.

As of April 21, SBI held a 25 percent stake in YES Bank, followed by CA Basque Investments with 9.1 percent and Verventa Holdings with 5.3 percent,  according to the bank’s latest investor presentation.

“I am not concerned and fundamentally nobody should be concerned. Because SBI’s stake is 25 percent, so anybody who comes with that kind of stake needs to have the RBI’s approval. So, it means there will be proper due diligence of the new investor,” Kumar said during an exclusive interview with Moneycontrol.

Regulations state that a bank cannot remain invested in another bank, Kumar pointed out. “When YES Bank has come to the normal level, it is important that State Bank of India is replaced by a strategic investor,” he added.

Also read: MC Exclusive: 25% of YES Bank’s investment in RIDF to mature in FY25: Prashant Kumar, CEO

A clutch of banks, including SBI, HDFC Bank Ltd and ICICI Bank Ltd, as well as Life Insurance Corp. Of India, had rescued Yes Bank after the lender’s financials plunged to precarious levels due to alleged mismanagement and financial irregularities under the bank’s earlier promoters. Yes Bank was rescued based on the reconstruction scheme formulated by the RBI in consultation with the Government. In subsequent years, the bank enhanced its financials by addressing growth and asset quality issues. A stake sale will allow the institutions brought in to rescue Yes Bank to exit the lender.

Reports of likely stake sale

In March, Livemint reported that the bank is planning to sell up to 51 percent of its stake for a target valuation of $8-9 billion, which is a significant increase from its current market capitalisation of $7.2 billion. Citigroup's India unit has been enlisted to facilitate the search for a potential buyer, the report said.

Yes Bank has sent invitations to various Indian lenders, including current shareholders, to participate in this endeavour, according to the report. Also, the bank has initiated discussions with banks and financial institutions in Japan, West Asia, and Europe for the sale of at least 51 percent in Yes Bank, the report added. However, any new promoter holding more than a 26 percent stake will need special approval from the RBI, as per central bank regulations, it noted.

on April 12, Moneycontrol reported that Japan’s Mitsubishi UFJ Financial Group (MUFJ) and Sumitomo Mitsui Banking Corp. (SMBC) were also considering a bid for India’s sixth largest private sector lender in terms of assets.

After this, on April 23, Moneycontrol reported Dubai’s largest lender, Emirates NBD, has expressed preliminary interest and is evaluating the submission of a bid to acquire a majority stake in Yes Bank.

“Yes, Emirates NBD is exploring this opportunity,” one of the people cited above said. According to a second person familiar with the proposed transaction, initial bid submissions for Yes Bank are expected by the end of the month. Both spoke to Moneycontrol on the condition of anonymity.

The lender had reported a net profit of Rs 451 crore for the January-March quarter of financial year (FY) 2023-24, a 123 percent jump from the Rs 202 crore clocked in the same period a year earlier.

Yes Bank's gross non-performing assets (NPA) stood at 1.7 percent, down from 2.2 percent recorded in the same quarter last year. The net NPA for the quarter stood at 0.6 percent, improving from 0.80 percent on a year-on-year basis. Gross slippages for Q4FY24 stood at Rs 1,356 crore versus Rs 1,233 crore in Q3FY24.

Also read: Yes Bank seeks new promoter, eyes $8-9 billion valuation: Report

The lender’s net interest income came in at Rs 2,153 crore, inching up 2 percent from Rs 2,105 crore in the corresponding quarter of the previous fiscal year.

On May 23, shares of YES Bank closed at Rs 23.08 on the BSE, up 0.48 percent, while the Sensex, the exchange’s benchmark equity index, ended 1.6 percent up at 75,418.04.