Yes Bank crisis: ICICI Bank, HDFC, Axis, Kotak to infuse Rs 3,100 cr in crippled private lender as part of bailout plan

ICICI Bank, HDFC, Axis Bank and Kotak Mahindra Bank will together invest Rs 3,100 crore as part of the RBI's reconstruction plan for the crisis-hit lender, according to the regulatory filings

FP Staff March 13, 2020 18:54:24 IST
Yes Bank crisis: ICICI Bank, HDFC, Axis, Kotak to infuse Rs 3,100 cr in crippled private lender as part of bailout plan

ICICI Bank, HDFC, Axis Bank and Kotak Mahindra Bank will together invest Rs 3,100 crore as part of the RBI's reconstruction plan for the crisis-hit Yes Bank, according to the regulatory filings.

In a exchange filing, ICICI Bank on Friday said it will invest Rs 1,000 crore in Yes Bank and the decision was taken at bank's board meeting held on Thursday.

"The Board... accorded approval for an equity investment of up to Rs 10 billion in equity shares of Yes Bank Limited, comprising up to 1 billion equity shares at a price of Rs 10 per share, under the proposed Scheme of Reconstruction of Yes Bank Limited under the Banking Regulation Act, 1949, subject to regulatory and government approval," ICICI Bank said in a regulatory filing.

This investment will result in ICICI Bank Ltd holding in excess of 5 percent shareholding in Yes Bank, with the final shareholding to be determined based on the final Scheme of Reconstruction and share issuance thereunder, it added.

HDFC also announced that it will invest Rs 1,000 crore in troubled Yes Bank.

"The Corporation is investing in 100 crore equity shares of Rs 2 each of Yes Bank for a consideration of Rs 10 per share (including Rs 8 premium) for an aggregate consideration of Rs 1,000 crore," HDFC Ltd said in a regulatory filing.

This investment is likely to result in the Corporation (Housing Development Finance Corporation) holding in excess of 5 percent shareholding in Yes Bank, with the final shareholding to be determined based on the final Scheme of Reconstruction and share issuance thereunder, it said.

Meanwhile, Axis Bank and Kotak Mahindra Bank also said they will invest up to Rs 600 crore and Rs 500 crore respectively in Yes Bank as part of the reconstruction plan for the cash-strapped peer lender.

"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 said in a regulatory filing.

Yes Bank crisis ICICI Bank HDFC Axis Kotak to infuse Rs 3100 cr in crippled private lender as part of bailout plan

Representational image. Reuters.

"...the Bank has issued a equity commitment letter to invest Rs 500 crore (the 'equity commitment') in Yes Bank Limited for subscription of 50 crore equity shares of Yes Bank at a price of Rs 10 per equity share," Kotak Mahindra Bank said in a regulatory filing.

The commitment is pursuant to the scheme of reconstruction of Yes Bank proposed by the Reserve Bank of India (RBI) under Section 45 of the Banking Regulation Act, 1949, and is subject to regulatory approvals and other conditions, it added.

The RBI superseded Yes Bank's board on 5 March and put the lender under a moratorium, restricting withdrawals to Rs 50,000 per account till 3 April.

Finance Minister Nirmala Sitharaman on Friday said the moratorium will be lifted in three days after the notification of reconstruction scheme for Yes Bank..

On the cost of acquisition of shares in Yes Bank, ICICI Bank said it is for cash consideration of Rs 10 billion wherein it will acquire 1 billion equity shares of face value of Rs 2 at a premium of Rs 8 per share.

ICICI Bank also clarified that this is not a related party transaction.

Total assets of Yes Bank Ltd stood at Rs 3,46,576 crore as end of September 2019. The bank posted a net loss of Rs 486 crore for the first half ended September of the current fiscal year on a total income of Rs 17,421 crore.

Yes Bank will on Saturday (14 March) announce its third quarter results, which was delayed amid the bank's capital raising plans.

As per the RBI approved reconstruction plan for Yes Bank, the country's largest lender SBI will pick-up 49 percent stake in the cash-strapped private sector lender by infusing Rs 7,250 crore.

Also, SBI will have to maintain at least 26 percent shareholding for three years.

Briefing reporters after the cabinet meeting here, Sitharaman said the reconstruction scheme keeps at its core the protection of depositors' interest, providing stability to Yes Bank and keeping a stable financial environment and banking system.

(With PTI inputs)

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