 "Ravneet Gill")
Having consolidated loan book, now YES Bank is on to the second round to raise capital. The bank will expand its loan book on the strength of fresh capital, clean-up, and improved risk management, Ravneet Gill, managing director and chief executive of YES Bank, tells Hamsini Karthik and Abhijit Lele in an interview. Edited excerpts
The share price of bank was hammered for two days earlier this week and then saw a 32 per cent surge on Thursday. How does that weigh on the bank?
I think there was no fundamental concern about the bank. We knew why the share was falling. Only thing that was concerning me was that it should not become a source of concern for depositors. The drop in share price is not in any way reflective of the inherent strength of the bank.
Our liquidity and capital are well above regulatory thresholds. We are into silent period, so can’t give much of a market guidance.
You have shrunk the book by 4 per cent in Q2, and the bank has raised $300 million capital. How does that help?
We were able to demonstrate to the market that access to capital market (for YES Bank) was intact. Now, we are against raising capital, which should help support the business for 2-2.5 years.
We wanted to have a capital position comfortably above the threshold. This could be done by raising incremental capital. And till you raise that money, you need to shed loans to conserve capital. We offloaded some loans from the wholesale banking side. We have sold some portfolio from the investment book and some loans in excess of Rs 10,000 crore.
There is a large book (to shed) loans, and we can go many quarters without raising capital. At the end, the market does not reward you for consolidating. Once we get fresh capital (Common Equity tier-I) in comfortable double digits, I can keep growing.
What will be a favourable price (of stock) for you to go to the market? You have said you would like to bring in strategic investors and not just financial investors…
We engage with three types of investors — private equity funds, some strategic investors, and family offices. Given the current market cap, dilution will be higher and we will need a consortium of investors.
What is the larger priority now — bringing in the required capital or a strategic partner?
Our first priority is capital. We remain focused on our earlier plan to raise $1-1.2 billion.
You’ve also allayed fears on a potential merger.
The Ministry of Finance and the RBI had told us that they would want to see a very strong and independent YES Bank. All the discussions around a merger is just rubbish.
Do you believe promoters exiting the bank will comfort for investors?
To be honest, the way they had to sell their shares was unfortunate. As YES Bank’s MD & CEO, I can tell you, there was never an interference. Since I took over, I have been in charge of the decisions.
Do you believe that with the new capital coming in and a substantial amount of clean-up already underway, can YES Bank come back to comfortable asset quality position?
The asset quality of the bank has stabilised and, if you look at the March FY19 quarter, we have worked in that direction. So, yes, we are headed in the right way.
The three large accounts classified as stress weren’t resolved in Q2. How will that impact your books?
A majority of these accounts are standard and the clients are servicing these loans. The borrowers have been cooperating with us. I expected a resolution during the quarter, but it is taking a little longer.
