oppn parties Yes Bank: Sinking Into A Morass

News Snippets

  • Police stop a 12-year old girl on her way to the Sabarimala shrine
  • In Karnataka, the JD(S) indicates that it might support the BJP government if it falls short of numbers after the bypolls
  • Congress pips the BJP in local body elections in Rajasthan, winning 961 wards to the BJPs 737
  • After Airtel and Vodafone-Idea, Jio also indicates that tariffs will be raised from December
  • Sources in Shiv Sena say that they might revive the alliance with the BJP if it offers the 50:50 deal
  • A miffed Sanjay Rout of the Shiv Sena says that it will take "100 births" to understand Sharad Pawar
  • Mobile operators Vodafone-Idea and Airtel decide to raise tariffs from next month
  • Sharad Pawar meets Sonia Gandhi and says more time needed for government formation in Maharashtra
  • Justice S A Bobde sworn in as the 47th Chief Justice of India
  • Supreme Court holds hotels liable for theft of vehicle from their parking area if parked by valet, says "owner's risk" clause is not a shield from such liability
  • Finance Minister says she is receiving feedback from many sectors that recovery is happening as there is lower stress
  • Sabarimala temple opens, but police bar the entry of women below 50 years
  • Finance Minister Nirmala Sitharaman says Air India and BPCL to be sold off by March
  • Media person Rajat Sharma resigns as DDCA president
  • Shiv Sena, NCP and Congress postpone meeting the governor of Maharashtra
Two Muslim litigants in Ayodhya refuse to accept the Supreme Court order, say review petition might be filed
oppn parties
Yes Bank: Sinking Into A Morass

By A Special Correspondent

Yes Bank shares tumbled nearly 13% to close at Rs 85.90 today. This has been a steep fall from the price a year ago which was ruling at Rs 404. The nearly 80 percent fall in a year has meant that Rana Kapoor, the co-promoter of the 4th largest bank in India, has lost about Rs 7000 crore on his 10 percent holding in the bank.

The drop in price on Thursday was due to the fact that the bank reported quarterly earnings on Wednesday that showed that its bad loan ratio had widened even as the capital buffers had weakened considerably. This created panic selling in the market, leading to a rout. The slide is expected to continue as analysts in financial service firm Jefferies have downgraded the price forecast for the bank from Rs 80 to just Rs 50 saying that the current results are "far worse than we had anticipated".

Yes Bank was pulled up by the RBI over its bad debt accounting policies in 2018. The apex bank trimmed the tenure of MD & CEO Rana Kapoor and asked him to step down by January 31, 2019. The Board of the bank selected ex-MD of Deutsche Bank, Ravneet Gill and his appointment was approved by the RBI. But ever since the RBI intervention, the bank's shares have taken a beating at the bourses as reports came out tumbling that the bank had window-dressed its balance sheet.

Although Ravneet Gill has now said that asset quality troubles have peaked and that the house is back in order, the erosion of capital buffers means that there is more, and serious, trouble in store for the bank. It has to raise capital and since share prices are going south, it will be extremely difficult. A watchlist that has Rs 10000 crore of potentially stressed loans and a book of Rs 29000 crore below-investment-grade exposure do not make for a very rosy picture. Gill's business acumen and experience alone will not be enough to lift Yes Bank from the morass it seems to be sinking into.