After SBI, ICICI Bank, Axis Bank, Kotak Mahindra Bank to pump in Rs 2,100 crore in YES Bank
After State Bank of India, ICICI Bank, Axis Bank and Kotak Mahindra Bank have announced plans to invest in the Yes Bank under RBI's reconstruction scheme for the troubled lender. According to respective regulatory filings, ICICI Bank will invest Rs 1,000 crore, Axis Bank will pump in Rs 600 crore, and Kotak Mahindra Bank will put Rs 500 crore to revive the cash-strapped Yes Bank.
The ICICI Bank board on Friday approved to acquire 100 crore equity shares in YES Bank at Rs 10 apiece. This is the second biggest investment in the troubled lender after SBI's promised Rs 7,250 crore in the bank.
ICICI Bank Limited, in a statement, said this investment is likely to result in ICICI Bank holding over 5 per cent stake in Yes Bank, with the final shareholding to be determined based on the final scheme of reconstruction and share issuance thereunder.
"The Board of Directors of Axis Bank Ltd at its meeting held today has accorded approval to invest a sum of up to Rs 600 crore for acquiring up to 60 crore equity shares of Rs 2 each of Yes Bank Limited, for cash, at a premium of Rs 8 per equity share, under the proposed Scheme of Reconstruction of Yes Bank Limited under the Banking Regulation Act, 1949," Axis Bank told the stock exchanges.
After this investment, Axis Bank will hold less than 5 per cent of Yes Bank's new issued and paid-up capital, the private lender said in its filing. As on December 31, 2019, Axis Bank's promoter, Life Insurance Corporation of India (LIC), holds 8.06 per cent of equity share capital of Yes Bank, the filing further added.
Meanwhile, Kotak Mahindra Bank told stock exchanges that it has issued equity commitment letter to invest Rs 500 crore in Yes Bank for subscription of its 50 crore equity shares at a price of Rs 10 per share. This equity commitment is pursuant to the scheme of reconstruction for Yes Bank and is subject to regulatory approval.
These developments have come on the same day that the Union Cabinet approved Reserve Bank of India's draft reconstruction scheme for Yes Bank. In a press briefing after the Cabinet meet Finance Minister Nirmala Sitharaman said that RBI is engaging with private investors willing to participate in Yes Bank's revival plan.
"State Bank of India will invest up to 49 per cent of the equity. Other investors are also being invited and quite a lot of engagement by the RBI is happening to bring in other investors. There will be a three-year lock-in period for SBI for up to only 26 per cent of the 49 per cent that they are investing. For the rest of the investors, it will be lock-in for three years of 75 per cent of their investment," Sitharaman said.
Key features of the YES Bank revival plan would be revealed once the official notification comes, the FM said, adding that authorised capital had been raised from Rs 1,100 crore to Rs 6,200 crore to accommodate immediate and subsequent raising of capital requirements.
"The notification shall come out, and the moratorium shall cease on the third working day at 1800 hours from the date of the notification. Office of the administrator shall stand vacated after seven calendar days from the cessation of the moratorium and a new board shall be constituted," said the Finance Minister.
On March 5, Yes Bank was put under moratorium by the RBI till April 3 due to deteriorating financial position, governance issues, false assurance on raising funds, non-serious investors, and outflow of liquidity. The government has limited withdrawals to Rs 50,000 for a month, superseded YES Bank board and appointed Prashant Kumar, former Deputy Managing Director and CFO of State Bank of India (SBI), as administrator.
On March 6, RBI had tabled the draft reconstruction scheme for reviving Yes Bank, where SBI had consented to willingness to invest in the troubled private bank.
Also Read: SBI to invest Rs 7,250 crore in Yes Bank