YES Bank rallies 15% on co-founder Rana Kapoor's stake sale reports

Reports of YES Bank co-founder Rana Kapoor (pictured) selling his stake in the bank to One97 Communications — the owner of Paytm — led to a rally in the lender’s stock on Wednesday. Shares were up 15 per cent in intra-day trade, befo­re closing with 13.5 per cent gains at Rs 71.6 apiece. Kapoor and associate entities owned 10.6 per cent in the bank as of June 2019, and around 7.3 per cent of the family stake has been pledged with Reliance Nippon Asset Management Company. 

Analysts believe the investment by new investor would impart confidence to the Street. “After the recent corporate governance issues, there is low confidence among investors regarding growth and loan book asset quality guidance. The new investment, if happens, would help revive the trust,” says Lalitabh Shrivastawa, AVP at Sharekhan.

“We view the entry of a strong stakeholder as sentimentally positive as it would hopefully add to the overall bandwidth, strategy and corporate governance practices of the bank,” Shrivastawa added.

Issues related to corporate governance, the Reserve Bank of India’s bad loan or non-performing asset divergent reports showing under-reporting of bad loans by YES Bank shook up investor confidence sharply. 

RBI also denied Kapoor’s extension to continue as MD and CEO in November last year. Stock of the private sector lender has lost about 70 per cent in the last six months. 

The bank, however, on Tuesday evening submitted a clarification to the stock exchanges mentioning that the new reports as speculative. “The Bank in the usual and ordinary course of its business continues to explore various means of raising capital/funds through issuance of securities to diverse set of investors, in order to meet its business/regulatory requirements, subject to compliance with prescribed procedures and receipt of statutory/regulatory approvals. We shall keep the stock exchanges duly informed about the disclosures required to be made under Regulation 30 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015,” the lender said in the exchange filing.