SBI to up Yes Bank stake to 49%, will not sell share before 3 yrs: Chairman

PTI, Mar 18, 2020, 1:43 PM IST

Mumbai: State Bank chairman Rajnish Kumar on Tuesday said the country’s largest lender that owns close to 43 per cent in Yes Bank now will not sell a single share before that mandated three-year lock-in period, and that he’s in fact keen to approach the board for hiking the holding to 49 per cent.

Under the RBI and government-driven rescue of the fourth largest private lender, SBI was initially asked to take up to 49 per cent by investing Rs 7,250 crore into the equity capital of Yes Bank. But as seven other lenders came on board, it could pick up only around Rs 43 per cent or 60.50 crore shares for Rs 6,050 crore.

Explaining the rationale for the lower stake, the chairman said: “since investor interest was overwhelming, which met the current capital requirement, we chose to pick up only so much in the first round of fundraising.”

“But there is tremendous interest from other investors to come on board. Though we don’t need any fresh capital, we would not mind increasing the core capital base as Yes Bank returns to normalcy and the resultant faster growth.

In fact, I am keen to move my board to seek permission to increase the stake to the maximum permissible 49 per cent and that it’s my commitment that SBI will not sell a single share before the three-year lock-in. This is in spite of the regulatory and government permission to pare down our equity to 26 per cent after three years. And I don’t see my board saying no to the proposal as well,” Kumar said.

Stating that the investors will not regret coming onboard a new Yes Bank, he pointed to the massive rise in the share price of the scrips.

It can be noted that Yes Bank stocks, after tanking to paltry Rs 5.55 last Thursday when the bank following the bloodbath in the street, have rallied over 1,000 per cent since to close at Rs 58.65 on the BSE on Tuesday despite the market since then plunging close to 13 per cent.

The chairman also said SBI will have two members on the new board of Yes Bank and he has already cleared the name of deputy managing director and chief credit officer Partha Sengupta for the same and has also recommended another deputy managing director G Swaminathan’s name.

The latter is a retail banking specialist at SBI, he said underscoring the need for Yes Bank to become a retail-focused lender going forward.

Kumar also clarified that “there wouldn’t be any need to depend on external sources for liquidity saying we have more than enough credit line to draw from but I don’t think we need to draw down on them given the present liquidity position.”

On the raging coronavirus pandemic, which has crippled the hotel, tourism and travel industries including airlines, Kumar said the bank is assessing the impact on the same and may come out with measures to alleviate the pain.

Earlier in the day, SBI Research pegged the losses arising the pandemic for these sectors at 5 per cent loss due to their inoperability shocks which in terms of their GDP contribution could be as much as 90 bps over FY20 and FY21.

The proposed one-month travel ban will have a severe impact on foreign tourist and earnings. Based on the above numbers “we can estimate that the loss will be around 2-3 million tourists in 2020 that will lead to loss of USD 5-7 billion foreign exchange earnings.”

On an average 25 million persons use aeroplanes and 300 million uses trains monthly for travelling. A 10 per cent reduction will lead to loss of revenue of Rs 3,500 crore on a monthly basis.