Yes Bank's shares continued its southward journey on Wednesday and closed with a loss of nearly 12 per cent after global rating agency Moody's Investors Service downgraded the lender's foreign currency issuer rating to Ba1 from Baa3, citing concerns over the transition in leadership as well as the governance issues.
Extending previous session losses, Yes Bank shares plunged 11.71 per cent to settle at Rs 161.70, emerging as the top laggards on the Bombay Stock Exchange. During the day's trade, scrip touched a 52-week low of Rs 160.15 after opening at Rs 181.
The investor sentiments were also dented by media reports which stated that its promoter firms, YES Capital (India) Pvt Ltd and Morgan Credits Pvt Ltd, routed debt money as equity into private finance companies.
Responding to media reports, Yes Bank, the country's fourth largest private sector lender, clarified that it is not involved in any way whatsoever with the funds management of two companies referred in media articles and the Bank has no dealings with these two companies except to the extent that Yes Capital (India) Private Limited and Morgan Credits Private Limited, being promoter group entities.
On Tuesday, Moody's had also downgraded the bank's foreign and local currency bank deposit ratings to Ba1/NP from Baa3/Prime-3 and foreign currency senior unsecured MTN program rating to (P)Ba1 from (P)Baa3.
The rating agency believes that although the bank's reported credit fundamentals remain stable, the developments surrounding the transition in leadership as well as the governance issues are credit negative because they complicate management's effective implementation of the bank's long-term strategy. Furthermore, these developments could constrain the bank's ability to raise new capital, Moody's said.
On November 14, Yes Bank non-executive chairman Ashok Chawla and independent director Vasant Gujarathi had resigned. Meanwhile, all eyes will be on the December 13 board meeting where the directors of the bank would consider the proposals for appointment of Independent Directors.