YES Bank to delay Dec-quarter results amid talks to raise capital

The bank and its financial advisors are in discussions with investors on commercial terms. The investments, including pricing and size of the stake to be acquired, are all subject to regulatory approv

YES Bank will delay the announcement of its December quarter (Q3) results as it is in talks with potential investors, including J.C. Flowers and Silver Point Capital, for raising equity capital.

 

In a filing to the BSE, the lender said it had received non-binding expressions of interest (EoIs) from several investors including J.C. Flowers & Co, Tilden Park Capital Management, OHA (UK) LLP (part of Oak Hill Advisors), and Silver Point Capital.

 

The bank and its financial advisors are in discussions with these investors on commercial terms. The investments, including pricing and size of the stake to be acquired, are all subject to regulatory approval.

 

The current capital raising process is engaging the bank’s attention and hence it will publish its results for Q3 and the nine months ended December 31, on or before March 14, 2020. The bank added that this exceeds the 45-day period from the end of the relevant quarter to announce results, as stipulated by the Securities and Exchange Board of India.  YES Bank shares closed 4.5 per cent lower at ~35.2 per share on the BSE. India Ratings has downgraded YES Bank’s long-term issuer rating to ‘A-’ from ‘A’, on account of the continued delay and inconclusive quantum of the anticipated equity infusion. It remains on Rating Watch Negative (RWN). This could adversely impact the bank’s franchise and potentially create challenges on asset and liability side, the rating agency said in a statement.

 

It has sizable foreign currency liabilities and institutional deposits. The required capital infusion is critical for providing sufficient cushion from the possible credit cost impact due to the stressed asset pool on regulatory capital requirement, in the short- and medium-term. The capital is also crucial for serving its customers adequately, said India Ratings.

 

YES Bank’s liquidity position seemed adequate as of September 2019 (liquidity coverage ratio of 114 per cent).

 

However, in the absence of any swift capital raise, the bank’s ability to manage its asset and liability maturities could get tested further.  The lender continues to remain in discussions with potential investors. However, raising sizeable capital in the near term could be challenging and could require various approvals.