Yes Bank’s ARC scheme will reduce the need for higher provision cover: ICRA

“It will also prevent dilution of capital ratio arising out of such accelerated provisions. Yes Bank seeks shareholder’s approval to raise capital ₹10,000 crore, which can be helpful in easing potential asset quality stress. If pressure mounts, timeliness for raising capital will be critical to the bank’s capital and solvency position.”

Mint reported on 2 September that Yes Bank has Received Expression of interest from a dozen investors to set up an asset reconstruction company with a private sector lender as minority partner. Some of the private equity firms showing interest in Brookfield Asset Management, Ares SSG, Oaktree Capital Management, JC Flower, Verde Partners, Carvall Investors, Avenue Asia Group, Bain Capitals India Resurgent Fund, Apollo Global Management, Rohtin Group and Silver Point . Capital.

Meanwhile, the rating agency also reaffirmed its current rating of the lender’s bond programs. Icra said the steady growth in the deposit franchise of Yes Bank since the reconstruction plan and the improvement in its liquidity position confirms the rating.

“While the growth in deposits has been commendable, the share of corporate and bulk deposits for the bank is relatively high. Incrementally, Yes Bank’s ability to create a more fine-deposit franchise will continue to be critical to its growth and profitability,” it said.

ICRA said ratings get rest from capital growth displayed ₹15,000 crore in July 2020 and ₹10,000 crore in March 2020, which helped restore the bank’s capital ratio. In addition, State Bank of India remains the largest shareholder with 30% shareholding as of June 30, 2021, with a lock-in that prevents any dilution in its shareholding in Yes Bank below 26% before March 2023.