YES Bank’s three-year equity lock-in period for investors came to an end on March 6, leading to a drop in its share price in early trade. The lock-in period’s expiry gives individual investors a chance to sell their shares after a long wait, while State Bank of India (SBI) may reduce its stake in the bank. Other shareholders such as Axis Bank, ICICI Bank, IDFC First Bank, and HDFC Bank also have a lock-in period that will expire on March 13, 2023.
The Supreme Court put on hold the Bombay High Court’s ruling on writing down AT-1 bonds, which may provide some respite to the bank. The Bombay High Court had nullified YES Bank’s March 2020 decision to write off ₹8,415 crore of additional tier 1 (AT1) bonds as part of the bailout plan, citing that the Administrator did not have the authority to take such a decision. YES Bank and the Reserve Bank of India challenged the decision in the Supreme Court.
The bank’s share price opened slightly lower at ₹16.82, down nearly 3% from the previous close of ₹16.86. YES Bank’s market capitalisation was at ₹48,221 crore, having fallen nearly 11% in the last three sessions. The stock later pared early losses and was trading 0.5% higher at ₹16.95 at the time of reporting.
According to analysts, retail investors may rush to sell their shares in YES Bank, leading to selling pressure in the next few sessions. However, SBI and other banks may not sell their entire stake randomly, having made strategic investments in YES Bank during the moratorium period to bail it out of the crisis.
In Q3 FY23, YES Bank reported an 80% YoY drop in its net profit, dragged down by ageing-related provisions. The lender’s non-tax provisions rose 125% YoY to ₹845 crore. Gross non-performing assets (GNPAs) improved to 2% during the third quarter from 12.9% in Q2 FY23, while net non-performing assets declined to 1.03% from 3.6% in the previous quarter. The bank raised ₹8,900 crore in the third quarter from private equity investors and appointed Sunil Kaul of PE firm Carlyle and Shweta Jalan of Advent International as additional directors onto the board. In December 2022, the Reserve Bank of India gave conditional approval to Carlyle Group and Advent International to acquire up to 9.99% each in YES Bank.
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