ICICI Bank to invest Rs 1,000 cr in Yes Bank

ICICI Bank will acquire 100 crore equity shares of Yes Bank at Rs 10 each.

ICICI Bank said its board on 12 March 2020 approved an investment of Rs 1,000 crore to revive the private sector lender Yes Bank. ICICI Bank said it will acquire upto 100 crore equity shares in Yes Bank at Rs 10 per share, under the proposed Scheme of Reconstruction of Yes Bank under the Banking Regulation Act, 1949.

This investment is likely to result in ICICI Bank holding in excess of 5% shareholding in Yes Bank, with the final shareholding to be determined based on the final Scheme of Reconstruction and share issuance thereunder.

The Union Cabinet on Friday, 13 March 2020, approved the reconstruction scheme for Yes Bank. The bank board will take over after the 7 days once the moratorium is lifted through the notifications. Last week, the Reserve Bank of India (RBI) had announced a draft scheme of reconstruction for the cash-starved lender.

As per the draft scheme, the authorised capital shall stood altered to Rs 5000 crore only and number of equity shares will stand altered to 2400 crore of Rs 2 each aggregating to Rs 4800 crore. The Investor bank shall agree to invest in the equity of the reconstructed bank to the extent that post infusion it holds 49% shareholding in the reconstructed bank at a price not less than Rs 10 (face value of Rs 2 and premium of Rs 8). The investor bank shall not reduce its holding below 26% before completion of three years from the date of infusion of the capital.

Earlier this month, RBI superseded the board of Yes Bank and imposed a month-long moratorium. RBI also capped Yes Bank depositor's withdrawals at Rs 50,000 per account for a month. It also appointed former chief financial officer (CFO) of SBI, Prashant Kumar as the administrator of Yes Bank.

Shares of Yes Bank rose 2% to Rs 25.55 while ICICI Bank rose 5.28% to Rs 447.45.

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