YES Bank clarifies share sale by top guys and other issues: 10 takeaways
There is no incremental stress other than what has been indicated as of Q1 of FY20, Gill said.
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The YES Bank management along with Ravneet Gill and other key personnel addressed analysts of some of the country’s top brokerages and investors on Thursday.
Here are the top 10 key takeaways from the con-call:
1) On Rajat Monga’s resignation…
Rajat Monga, the bank’s Senior Group President since its inception in 2004, has resigned, citing deteriorating health. The news came two weeks after Monga sold YES Bank shares on September 18 and 19.
2) Why bank employees, including chief risk officers are selling shares?
Gill said people have financial commitments and many of them had taken leverage to exercise ESOPs.
3) Why bank deposits declined 7% QoQ in Q2FY20?
The bank’s asset book declined and hence need for deposits was low. The bank is trying to make the balance sheet more granular and, hence, not renewing some of the wholesale deposits. There is no cap on any deposit withdrawal or redemption.
4) Will the bank sell loan portfolio?
The bank can look at selling loans to generate capital in case it feels the stock price is too low for capital raising. In the case of preferential allotment to QIBs (less than five institutions), the two-week stock price formula can be considered.
5) On plan for fund raising…
It is likely that the bank may need to do a substantially large dilution due to lower stock price and would need funds from multiple private equities (PEs), strategic investors and family offices.
6) On bank’s financials…
YES Bank did not disclose any P&L-related figures as it is in silent period due to upcoming quarterly results later this month.
7) On Tuesday’s blackout of internet banking…
Internet banking was down day before yesterday due to a systemwide issue. “We are in the festive season and e-commerce sales have increased tremendously. On that particular day, we had systematic challenges across a few of the big telecom service providers, which has an impact on branch connectivity across the banking sector and on online channels. There are challenges on the branch side, people go for online banking and volumes on that day was 10 times the planned capacity and that was not restricted to one bank. It was across the banking sector,” the bank clarified.
8) On debt stress…
There is no incremental stress other than what has been indicated as of Q1 of FY20. The bank doesn’t believe there is any reason to change the loss, given the default assumptions despite a weaker-than-expected macroeconomic environment. It has had a hard look at the security structures and is confident of recoveries.
9) On monetization of assets…
There could be some delay in monetisation of assets, though, as per the CRO (Chief Risk Officer). But liquidity of the bank is well above regulatory threshold as above CET 1.
10) Any plan for bank merger?
Management has been engaging with regulators as well as finance ministry officials and there is no pressure to merge, according to management, and these agencies want YES Bank to be a strong and independent financial institution, and are fully supporting the bank.