Price of leadership

SBI's YES Bank investment raises questions

State Bank of India’s decision (SBI) to come in as a white knight for YES Bank has raised several questions. Capital investment at Rs 10 per share (face value of Rs 2, premium of Rs 8) defies logic, as at least one marquee foreign brokerage cut YES Bank’s target price to Rs 1 just last week. Only time will tell whether SBI shareholders will gain from this investment. As rumours of a bailout by state-owned financial institutions began, the SBI stock started declining. It has fallen 16 per cent since February-end, while the Sensex has lost only 7 per cent.