It expects YES Bank’s common equity tier-1 (CET1) ratio of 8.7 per cent at the end of September 2019 to come under significant pressure if the bank is not successful in raising fresh capital in the next few quarters. Moody's said the lender’s funding and liquidity compares weakly to other rated private sector peers in India.
has told the market that it has received offers from a number of financial investors to invest up to $2 billion through new equity capital into the bank. The board of the private bank is meeting on December 10 to finalise the capital infusion programme.
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 next week. Discovery Capital will take $50 million and Ward Ferry $30 million.
The Reserve Bank of India (RBI) 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 is based on the 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 the RBI identified a divergence in the bank’s reported financials.