Yes Bank shares tank over 12% as 3-year shareholder lock-in period ends

Mar 13, 2023, 17:42 IST

Shares of private sector lender Yes Bank tanked more than 12% in early trade on Monday as a Reserve Bank of India (RBI)-mandated three-year lock-in for investors ended today.
In March 2020, RBI had imposed a reconstruction scheme and superseded Yes Bank’s board due to a steady decline in the lender’s financial position.
The institutional investors who came to the rescue of Yes Bank were mandated by RBI to hold 75% of their shares in Yes Bank, bought as part of the rescue plan, until March 13, 2023. SBI was to hold at least a 26% stake till March 2023.
Yes Bank’s financials have been improving since the crisis in 2020. The bank reported a net profit in FY22, its first full-year of profit since FY19.

Shares of private sector lender Yes Bank tanked more than 12% in early trade on Monday as a Reserve Bank of India (RBI)-mandated three-year lock-in for investors – who had infused funds into the struggling private-sector lender in 2020 in exchange for an equity stake – ended today.

At 12:54 a.m, Yes Bank shares had recovered some of the losses to trade at ₹15.75, lower by 4.55%. Meanwhile, the benchmark indices were also under pressure with all sectoral indices in the red. The Sensex and the Nifty were down 0.5% each while the Nifty Bank index fell 0.80%.

For context, in March 2020, the Reserve Bank of India (RBI) had imposed a reconstruction scheme and superseded Yes Bank’s board due to a steady decline in the lender’s financial position, which struggled to raise adequate capital to make provisions for potential non-performing assets.

As part of the reconstruction scheme, a consortium of 10 institutional investors led by State Bank of India (SBI) had infused ₹10,000 crore in Yes Bank to bail out the lender. Besides SBI, Axis Bank, IDFC First Bank and ICICI Bank are the other major banks that took part in the bailout.

The institutional investors were mandated to hold 75% of their shares bought as part of the rescue plan for three years until March 13, 2023. RBI had also asked SBI to hold at least a 26% stake in Yes Bank till March 2023.

As of December 31, SBI held 26.14% stake, IDFC First Bank had 1%, Axis Bank had 1.57% and ICICI Bank held a 2.61% stake in Yes Bank. Meanwhile, LIC held a 4.34% stake in the private-sector lender.

In December 2022, Yes Bank concluded the sale of stressed assets to JC Flowers Asset Reconstruction Company on loans worth ₹48,000 crore, which led to a substantial reduction in the bank’s gross non-performing assets.

Also, Yes Bank’s financials have been improving since the crisis in 2020. The bank reported a net profit of ₹1,066 crore in FY22 after a net loss of ₹3,462 crore in the previous fiscal year. In fact, FY22 was the first full-year of profit since FY19.

In Q3 FY23, Yes Bank said it has recorded a "sustained improvement" in non-performing asset ratios. The gross non-performing asset (GNPA) ratio stood at 2% in the December quarter, as against 14.7% last year. The net NPA ratio came down to 1%, as compared to 5.3% in Q2 FY23.

$YESBANK.NSE is still not out of its own created wounds as it is still trading below 200DEMA. I will be not taking any trade in this scrip till it not started trading above 200dema and sustain over it. There is too much noise around it as the three-year lock-in period ends today and i will suggest everyone to wait and watch bcs if it breaks the level of Rs-14 then no one will stop it before Rs-9 levels. So it is better to take a look standing on the sideline and not to enter into the tide.
— (@StockGurukul) March 13, 2023

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