Yes Bank sells stressed assets amounting to Rs 48,000 crore to JC Flowers ARC; details here

Yes Bank has concluded assigning its stressed asset loan portfolio to JC Flowers Asset Reconstruction Company (ARC). The completion of the assignment of Yes Bank’s non-performing assets amounts to Rs 48,000 crore of the principal outstanding, as on 31 March 2022. This is the single largest transaction of the sale of NPAs in India’s banking system so far, as per a Mint report. With the transaction, Yes Bank is likely to benefit from the recoveries in excess of the present considerations. According to a statement by Yes Bank on Monday, it is confident that JC Flowers ARC will help realise the true value of the assets being assigned under the sale transaction.

A binding bid of Rs 11,183 crore under a 15:85 structure (15 percent cash and 85 percent receipts) was submitted by the JC Flowers ARC for the assignment of a bunch of the bank’s identified stressed assets, for the position, as on 31 March this year.

Later, Yes Bank held a transparent bidding process on the basis of Swiss Challenge method under the Reserve Bank of India’s master direction on the transfer of loan exposures. This process was done with the bids submitted by JC Flowers being designated as the Base Bid. After this, Yes Bank’s board gave its approval for the declaration of JC Flowers ARC as the winner of the Swiss Challenge process in a meeting on 20 September.

Prashant Kumar, Managing Director & Chief Executive Officer of Yes Bank said, “The transfer of the Bank’s stressed assets marks the single largest non-performing asset sale ever in the India Banking System.” He further added that coupled with the capital raised recently, this is another milestone in the Yes Bank’s turnaround journey.

According to Kumar, this transaction is going to further strengthen their balance sheet. The Yes Bank CEO stated that the deal will allow the lender to focus completely on growth and profitability as future strategic objectives. Kumar believes that JC Flowers ARC platform is going to serve as a model and will aid other Indian financial institutions to tap and monetize the global investors’ interest in the distressed credit markets.
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