Yes Bank | In RBI bailout, SBI to pick up 49% stake for ₹2, 450 crore
PSU bank to invest ₹2,450 crore; reconstruction scheme will protect jobs for a year; new, six-member board set up.
The Reserve Bank of India (RBI) on Friday announced a draft reconstruction scheme for the beleaguered Yes Bank, aimed at protecting depositors’ funds while bringing in the State Bank of India as an investor. For employees of the bank, service conditions, including remuneration, will remain the same, at least for one year. This does not, however, include key managerial personnel, on whom the Board can take a call.
According to the draft resolution plan, the authorised capital for the reconstructed bank will be ₹5,000 crore, with 2,400 crore equity shares of ₹2 each aggregating to ₹4,800 crore.
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The SBI, which had earlier said its Board was exploring an investment in Yes Bank, will pick up a 49% stake, according to the scheme. The deal would be at a price not less than ₹10 per share with face value of ₹2. The SBI cannot reduce its holding below 26% before completion of three years from the date of infusion of the capital, the RBI said. To pick up 49% stake, SBI will have to invest ₹2,450 crore, sources said.
On March 5, the government had put a moratorium on Yes Bank till April 3 following its deteriorating financial condition and the banking regulator superseding the board and appointed an administrator.
The new Board will have at least six members, an MD & CEO, a non-executive chairman and two non-executive directors, while the remaining two nominee directors would be appointed by the SBI. “The members of the Board so appointed shall continue for a period of one year, or until an alternate board is constituted by Yes Bank Ltd., whichever is later,” the RBI said.
The central bank said all the deposits and liabilities of the bank will continue in the same manner in the reconstructed bank, unaffected by the scheme.
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“All the deposits with and liabilities of the reconstructed bank, except as provided in the scheme, and the rights, liabilities and obligations of its creditors, will continue in the same manner and with the same terms and conditions, completely unaffected by the Scheme,” it said.
However, Additional Tier 1 capital which was issued by the Yes Bank under Basel III framework, “shall stand written down permanently, in full, with effect from the Appointed date,” the scheme said.
RBI Governor Shaktikanta Das has said the resolution of Yes Bank would be done swiftly.
“The resolution (of Yes Bank) will be done very swiftly, it will be done very fast. The 30 days which we have given, is the outer limit,” Mr. Das said at the sidelines of an event.
The scheme has taken care of the employees as it mandates that they will continue to with same same remuneration and service conditions at least for one year.
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However, the board will have the freedom to discontinue the services of the Key Managerial Personnel (KMPs) at any point of time after following the due procedure. There will be no change in the offices or branch network of the reconstructed bank.
Comments have been invited for this draft scheme by Monday, March 9, after which RBI will take a final view.
Also read | Moody’s downgrades Yes Bank’s ratings
Prashant Kumar, the RBI-appointed administrator of Yes Bank assured that the lender is taking necessary steps to ensure seamless transactions for the customers and there is no reason for depositors to panic.
“The current moratorium has been brought into effect keeping the depositors’ interest in mind and towards restoring their confidence. A solution is being worked upon to revive the Bank well before the moratorium period of thirty days ends. The Bank is also taking necessary steps to ensure seamless transactions for the customers. We assure the depositors that their money is safe and there is absolutely no reason to panic,” Mr. Kumar said.
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