Yes Bank under CEO Ravneet Gill⁠— eight months of wild mood swings

  • The share price has seen sharp rises and falls in recent months-- adding up to a fall of 72% since Gill took over.
  • Yes Bank second quarter earnings were worse than expected.
  • The stock lost another 3% plus today after the gross NPA rose over 2.5x in last 3 months.
Ravneet Gill moved from Deutsche Bank to take over as the Chief Executive Officer of Yes Bank in March 2019. The share price has lost nearly three-fourths of its value since then. The value erosion in the bank’s share price has to do with a lot of older, hidden dirt coming to the fore. But that’s not the only factor.

The confidence of both the investors and depositors has been tested repeatedly by events that have followed. The latest among the news around Yes Bank has been the shocking spike in bad loans⁠— nearly two-and-a-half times jump in just 3 months⁠— and the unexpected loss in the September quarter. “The events that have been unfolding recently corroborate our longstanding negative stance on the stock,” a Kotak Institutional Equities report said on November 2. The stock lost another 3% plus in the first trading session after the earnings on November 4.

Here’s a look at how Yes Bank has waded through its worst crisis under the stewardship of its new CEO Ravneeet Gill in the last eight months.

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April 2019: High-risk exposure

April 2019: High-risk exposure

Nearly ₹10,000 crore worth loans (about 4% of all its loans) given under the older management led by Rana Kapoor were classified as high-risk⁠— another way of saying these loans may turn bad in the next one year. The borrowers included troubled entities like Anil Dhirubhai Ambani Group, Cox & Kings, CG Power, Dewan Housing Finance (DHFL), Essar Shipping, and Mcleod Russel.

The stock lost 29% in a single day (April 30) after the bank reported its first ever quarterly loss. It seemed like, Gill had cleaned up the books and revealed all the dirt that Rana Kapoor had glossed over.

July 2019: First quarter earnings

July 2019: First quarter earnings

Three months later, Yes Bank reported a net profit of ₹114 crore⁠, down 91% from the same quarter last year. This was largely due to a sharp rise in provision⁠— which is the amount a bank sets aside in case a loan goes bad⁠— by over two-and-a-half times to ₹1,785 crore. Still, the stock fell less than 3% because the numbers were much better than what the market had estimated.

At that time, the bank declared bad loans at ₹6,883 crore. The real shock was yet to come.

August 16, 2019: Yes Bank says it raised ₹1,930 crore from investors]

August 16, 2019: Yes Bank says it raised ₹1,930 crore from investors]

On August 16, Yes Bank told the exchanges that it had raised ₹1930 crore through qualified institutional placement (QIP) to investors at a 4.95% discount to market price. The stock jumped nearly 4%.

Investopedia describes a QIP as a way for listed companies to raise capital without having to submit legal paperwork to market regulators.

The CG Power chaos

The CG Power chaos

Yes Bank lost 29% in four consecutive sessions as corporate governance concerns emerged in another company, CG Power, where the bank had 12.79% stake.

The stock continued tumbling until August 22, which is when another source-based news item appeared, which said that the bank was about to raise $1.2 billion in fresh investment. The stock recovered 9%.

Stock downgrades

Stock downgrades

There was a flurry of stock downgrades soon after, from Moody’s, India Ratings, and others. IDFC Securities cut the target price for the share price by more than half to ₹35 saying that gross NPAs (a measure of bad loans) will nearly double to 9.6% in the next two years. It had become amply clear that the bank will need more capital to stay afloat.

In a television interview that followed, Gill accused IDFC Securities of exaggerating the problem and that the bank’s situation had improved significantly in the preceding six months. He also assured investors that the bank is in talks with investors including private equity and “reputed family offices” to raise capital that will hold Yes Bank in good stead.

September 2019: Altico altercation

September 2019: Altico altercation

Altico Capital⁠— an unlisted finance company⁠— defaulted on its payment due to Yes Bank, which had a total exposure of ₹ 450 crore triggering panic among both investors and depositors alike. Yes Bank’s share price fell over 15% on a single day when the news came to light.


Peers like ICICI Bank and IndusInd Bank who had lent money to Altico also witnessed a similar crash in their respective share prices.

October 2019: The lowest in a decade

October 2019: The lowest in a decade

On the first of October, as the country was heading into a festive month with Dussehra and Diwali, the share price fell to ₹32, down 22.80%.


Yes Bank blamed the share fall on October 1, 2019 primarily to the sale of 10 crore shares held by Rana Kapoor but pledged to a lender, Reliance Nippon Asset Management. Kapoor’s stake in Yes Bank fell to 0.8% after the sale.

Chief Financial Officer Rajat Monga resigns

Chief Financial Officer Rajat Monga resigns

On October 3, the Senior Group President and former Chief Financial Officer (CFO) Rajat Monga resigned. “For the past two years, he has been carrying a lot of loads and needed some time off. So, he decided to leave,” Gill reportedly said in a conference call with analysts.

Later, the bank also announced that it opened 1.8 lakh new accounts between July and September⁠— a record for any quarter in the bank’s history. Low-cost deposits had improved 60 basis points in the three months between July and September 2019. The stock jumped 33% on October 3.

A research report and a fake whatsapp message

A research report and a fake whatsapp message

Going into the long weekend ahead of Dussehra, a Macquarie Research report warned that Yes Bank’s exposure to Indiabulls group could be as high ₹6,040 crore. Gill said that the payment due from Indiabulls Housing due by September last week is honored and that the account is standard and operational.

However, this report triggered a viral whatsapp message that triggered fears about Yes Bank’s survival. The bank responded by filing a complaint with Mumbai Police and Cyber Cell.

Microsoft rumour heals Indiabulls wounds

Microsoft rumour heals Indiabulls wounds

However, before the weekend ended, there was a Livemint report that Yes Bank was in talks with Microsoft and two other tech companies as strategic investors. The stock jumped 8% on that Monday (October 7) on a source-based report.

The Economic Times cited private equity players like TPG, The Carlyle Group and Farallon Capital as being interested in buying stake in Yes Bank.

However, the Bank said that it “is not aware of the source.” But the stock had already jumped 8.3%.

The big reveal

The big reveal

The stock steadily gained about 24% from October 7 to 27 and then came the big revelation on the day that the October futures and options series was set to expire. The bank announced that it had binding bids worth $1.2 billion. A television channel reported that it was from Hong Kong-based SPGP capital, which an PR agency representing the bank has unofficially denied. The stock gained 35% in one day just before the earnings shocker came about.

Bad loans, bad numbers

Bad loans, bad numbers

The very next day, Yes Bank reported a loss of ₹600 crore due to a decline of 20% in revenue and rise in costs. Operating profit fell 40% and gross non-perfoming loans rose to ₹17,100 crore nearly two and a half times more compared to three months ago, as mentioned earlier. This is more than the ₹10,000 crore that the bank had warned about in April 2019 right after Gill took over. And according to Emkay Global Financial Services, the bad loans may get worse.

The wait is for a white knight and the rumour mill is working overtime. After reports that SPGP may be interested, IANS, a wire agency reported that the Government of Singapore is negotiating with Indian Prime Minister’s Office and the Reserve Bank of India (RBI) for DBS to acquire a 51% stake in Yes Bank⁠— which DBS has denied subsequently.

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