 "YES bank")
YES Bank is gearing up to sell its non-performing assets (NPAs) worth Rs 32,344 crore to asset reconstruction companies (ARCs). It has appointed EY to advise it on the sale. Several ARCs have been sounded off by EY to submit their bids for the book.
YES Bank has already made provisions of Rs 24,476 crore. These represent 76 per cent of its gross NPAs. The sale of the NPA book will help the bank regain its lost place in the banking industry, which was marred by a scandal involving its former promoter Rana Kapoor.
Both EY and YES Bank declined to comment till the time of going to press.
As part of its clean-up, YES Bank had last week sold bonds issued by troubled housing finance company Dewan Housing Finance Corporation (DHFL) for Rs 500 crore in the secondary market. The bank had invested Rs 2,000 crore in DHFL’s bonds and managed to make a recovery of 25 per cent.
The bank is also looking at the option of selling its mutual fund business to free up capital by the end of the current financial year. Under a new management, the bank is also in talks with other strategic investors to set up an ARC, which will house all the NPAs.
In May this year, the auditor of YES Bank had pointed out several breaches of the Reserve Bank of India’s (RBI’s) norms and loan covenants by the private bank in the financial year ended March. These may impact the bank’s ability to continue as a going concern. The standalone financial results, which were later restated, had made an additional provision of Rs 15,422 crore for the period ended December 31, 2019.
The bank had to be bailed out through substantial fund infusion by government-owned State Bank of India and Life Insurance Corporation of India. The bank also launched a rights issue in July this year to raise Rs 15,000 crore at the rate of Rs 12 per share.
The clean-up of YES Bank was expedited after the RBI superseded the entire board of the bank in March this year and placed it under moratorium. This moratorium was lifted on March 18 and a new board was appointed by the RBI.
In its July-September quarter results, the bank said its balance-sheet consolidation continues while improving granularity and the liability profile. The bank has significantly strengthened its capital base by successfully raising Rs 15,000 crore through a follow-on public offer and fully repaid the RBI’s special liquidity facility of Rs 50,000 crore. The bank also raised long-term refinance borrowing in excess of Rs 5,500 crore.
