The Rs 15,000 crore capital that Yes Bank Ltd. is raising via a follow-on public offer, the largest ever by any entity, will suffice the growth requirements of the private sector lender for two years, its chief executive officer said on Monday.
The capital raised via the Yes Bank FPO will take the lender’s capital buffer five percentage points above the regulatory obligation, he said.
“The Common Equity Tier-I capital will go from 6.3% to almost 13%. It will take care of growth requirement for two years,” Yes Bank CEO Prashant Kumar said. “In addition to the capital, we also have comfort of 2.50% in deferred tax assets and are not including recoveries. 13% CET also is five percentage points over regulatory requirements.”
The bank, which was bailed out by State Bank of India in March, is aiming to raise Rs 15,000 crore by selling shares at Rs 12-13 apiece—a discount of nearly 50% to Friday’s closing price. SBI, which at present holds 49% stake in the lender, has committed to invest up to Rs 1,750 crore.
There is no holding requirement on shares bought in the Yes Bank FPO, except for the anchor investors, Kumar said, adding that their names will be announced on Tuesday evening.
On reports that the bank is under scanner over the FPO announcement, Kumar said it has not received any communication from SEBI. He acknowledged the withdrawal of exemptions received for accepting deposits at the GIFT City branch in May, but stressed that it does not have any impact on its operations.
According to Kumar, issues surrounding the lender’s corporate governance and legacy bad assets were identified and provided for in the last two quarters, but said that the pandemic can eat up up to one percentage point of capital due to provisioning.
On Monday, Yes Bank shares fell 13.33% to Rs 22.10 apiece on the BSE while the benchmark Sensex gained 0.27% to end the day at 36,693.69 points.