YES Bank likely to complete stressed asset sale to JC FLowers ARC by month-end

YES Bank

YES Bank expects to complete its stressed asset sale to JC Flowers ARC by the end of November, according to a top executive on Thursday.

Prashant Kumar, the lender’s chief executive and managing director, told reporters here that the transfer of bogus loans worth over Rs 48,000 crore to the asset reconstruction company (ARC) will take place by November.

It should be emphasised that practically all of these non-performing assets were issued by the institution under an older management led by its co-founder Rana Kapoor, who was later imprisoned for alleged wrongdoing.

The loan transfers will result in a huge fall in the bank’s stated gross NPA ratio to under 2 per cent from the current level of 12.89 per cent.

The ARC was chosen through a competitive process and is paying a portion of the loans that it will attempt to resolve as upfront cash.

Speaking on the sidelines of FIBAC 2022, Kumar stated that the legal processes are already underway and expressed optimism that the agreement will be completed by November.

Meanwhile, Kumar stated that the bank will take a 9.9 per cent share in the ARC as part of the acquisition and will await an RBI approval to increase its stake to the planned 20 percent level.

JC Flowers has pledged to pay the bank Rs 11,183 crore for the whole pool of stressed loans, ensuring the bank a 23 per cent recovery.

In addition, the bank intends to raise around Rs 8,000 crore in core capital from private equity firms Carlyle and Advent.

Speaking at the same conference, RBL Bank’s chief executive and managing director R Subramaniakumar stated that the private sector lender will launch a flurry of secured retail products such as house loans, loans against property, and in the coming months to protect its net interest margin.

He stated that there is a rush for deposits among banks due to increased credit demand, which would result in deposit rate increases due to competition pressures, and that the issues will last for the next two quarters.

Also Read | YES Bank to transfer asset worth $6 bn to private equity firm J.C Flowers

The bank’s objective over the next three years is to expand the share of retail loans in the entire mix to 65 per cent from 50 per cent now, he said, adding that retail will comprise 20 per cent from credit cards and 10 per cent from microlending.

On the BSE, Yes Bank was trading 1.94 per cent higher at Rs 15.80, while RBL Bank was up 1.05 per cent at Rs 135.25.

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