YES Bank dips 3% ahead of board meet to consider fund raising

YES Bank shares slipped up to 3 per cent to quote at Rs 55.55 in intra-day trade on the BSE on Friday, ahead of its board meeting scheduled later in the day. The stock, which was trading in the red for the last three sessions, is likely to consider raising funds worth $1.2 billion.

The private sector lender's stock has slipped 14 per cent in the past three trading days, as compared to a 2 per cent decline in the S&P BSE Sensex in the same period. The stock was quoting close to its 52-week low of Rs 53, also its lowest level since September 2013 on the BSE.

"The board will be considering raising of funds by way of issuance of equity shares when it meets on August 30," YES Bank said in a BSE filing, on Tuesday after market hours.

Earlier this month, YES Bank had raised Rs 1,930 crore through the Qualified Institution Placement (QIP) route. It had allotted 231 million equity shares to eligible qualified institutional buyers (QIBs) at Rs 83.55 per equity share.

According to Moody's Investors Service, on a pro-forma basis, the QIP will moderately improve the YES Bank's reported common equity tier 1 (CET1) ratio to 8.6 per cent from 8.0 per cent (as of June 30, 2019).

It expects the bulk of Bank's operating profits to get consumed by loan-loss provisions over the next 12-18 months, and thus not support internal capital generation.

The global rating agency, on August 28th, downgraded its long-term foreign currency issuer rating, citing the bank’s capital raise that fell short of its expectations. 
 

"The downgrade of YES Bank's ratings takes into account the lower than expected amount of capital raised by the bank recently; and the risk that the substantial decline in the bank's share price will challenge its ability to raise sufficient capital to maintain the rating at its previous level," it said.