Mumbai: Moratorium constrained Yes Bank has good news. Boards of two private lenders, Axis Bank and ICICI Bank, have agreed to collectively invest Rs 1,600 crores as equity cash transactions.
Private lender ICICI Bank's board has confirmed that it is jumping in the rescue-act of Yes Bank. Post end of trading hours on Friday, the bank in a notification filed with exchange houses explained that its board agreed to invest Rs 1,000 crores in a cash transaction for equity shares of Yes Bank.
ICICI Bank is the first private lender to invest in the troubled Yes Bank that is facing a moratorium. In its notification, the bank said, "we wish to inform you that the Board at its Meeting held on March 12, 2020 accorded approval for an equity investment of up to (nearly) 10.00 billion in equity shares of Yes Bank Limited, comprising up to 1.00 billion equity shares at a price of (nearly) 10.0 per share, under the proposed Scheme of Reconstruction of Yes Bank Limited under the Banking Regulation Act, 1949, subject to regulatory and government approval. This investment is likely to result in ICICI Bank Limited holding in excess of 5.0% shareholding in Yes Bank Limited, with the final shareholding to be determined based on the final Scheme of Reconstruction and share issuance thereunder. The below is the disclosure with respect to the Bank's proposed investment in equity shares of Yes Bank Limited."
The detailed notification is available for readers here.
Axis Bank too in a communication (almost the same time as that of ICICI) reported of investing Rs 600 crores. In its notification, Axis Bank said, "the Board of Directors of Axis Bank Ltd at its meeting held today accorded approval to invest a sum of up to Rs. 600 crore (Rupees six hundred crore only) for acquiring up to 60 crore equity shares of Rs. 2 each (Rupees two only) of Yes Bank Limited, for cash, at a premium of Rs. 8 (Rupees eight only) per equity share, under the proposed Scheme of Reconstruction of Yes Bank Limited under the Banking Regulation Act, 1949."
ICICI's infusion will take its ownership to 5%. In the case of Axis Bank, the exact ownership details are not clear considering LIC, the lead promoter in Axis Bank already holds 8.06 percent in Yes Bank Limited.
As on 30th September 2019, YBL had total assets of Rs 3,46,575 crore which includes an advance book of Rs 2,24,505 crore. The deposit base of the YBL was Rs 2,09,497 crore. YBL generated a loss of Rs 486 crore on a total income of Rs l 7,421 crore for Hl FY20. The results for Q3FY20 have not vet been released.
On Friday, the the Union Cabinet approved the Reserve Bank-proposed reconstruction plan for Yes Bank, under which the State Bank of India will pick up 49 per cent of the equity, while private investors, including ICICI Bank will be allowed to buy the rest.
According to Finance Minister Nirmala Sitharaman, the Cabinet decided that the SBI will hold at least 26 per cent stake in the private bank for a minimum period of three years.
Similarly, the other investors will also be mandated to have a similar lock-in period for 75 per cent of their investment in the bank. The authorised share capital of the Yes Bank will be revised upwards from Rs 1,100 crore to Rs 6,200 crore.
Besides, Sitharaman indicated that the details of the scheme will be notified soon. She said Yes Bank's moratorium will be lifted at 16.00 hours, after three working days of the scheme being notified. The office of the administrator shall also stand vacated after seven days from the cessation of moratorium and the new Board will take over the bank.
Last week, the RBI placed Yes Bank under moratorium and capped the withdrawal limit at Rs 50,000 till April 3, due to deteriorating financial health of the bank.
The central bank also superseded Yes Bank's board of directors and appointed former SBI CFO Prashant Kumar as its administrator.
Stocks of ICICIBank traded in Friday's trade gained 22.45 points or 5.28% to end at 447.45 per share. Stocks of AxisBank gained by 25.35 or 4.67% in intra-day to quote 568.20 at end of trade on the Bombay Stock Exchange.
Axis Bank throws in Rs 600 crore into the Yes Bank rescue kitty. https://t.co/2pXkqhaXGS— Ira Dugal (@dugalira) March 13, 2020
Will it cause more bloodbath at the dalal street tomorrow? Because people will be selling their axis and icici stocks like crazy.— Harshvardhan Jadhav (@Harshsjadhav) March 13, 2020