Last week, Yes Bank
increased the size of its equity capital offer to $2 billion from the earlier guidance of $1.2 billion on “strong interest” shown by NRI investors, including a $1.2 billion offer by Erwin Singh Braich and SPGP Holdings, and $500 million by Citax Holdings and Citax Investment Group.
Other prominent suitors are the Aditya Birla Family Office ($25 million), GMR Group and Associates ($50 million), and Rekha Jhunjhunwala ($25 million). Besides, a top-tier US fund house has evinced interest in investing $120 million. Its name will be disclosed early next week. Discovery Capital will take $50 million and Ward Ferry will take $30 million.
Moody's said the Indian private sector lender’s funding and liquidity compares weakly to other rated private sector peers in India, and could come under pressure if the bank is unable to strengthen its solvency in the next few quarters.
Yes Bank's ratings also take into account Moody's expectation of a moderate level of support from the Government of India (Baa2 negative) in times of need, which results in a one-notch uplift to the bank's ratings from its BCA.
Moody's said it expects that the Indian authorities will strive to maintain systemic stability and help prevent any weakness in the bank's standalone credit profile from significantly affecting depositors and creditors.
The support assumption also takes into account the bank's modest, but increased franchise and relative importance to India's banking system.
Banking regulator Reserve Bank of India identified several lapses and regulatory breaches in various areas of the bank's functioning in fiscal 2018. Moody’s assessment factors in the divergence in reported asset quality and profitability based on RBI's inspection.
The divergence includes higher non-performing loans and lower profitability as compared to the metrics disclosed by Yes Bank
in fiscal 2019. This is the third year when RBI has identified a divergence in the bank's reported financials.