Banks, financials tumble; RBL, AU Small Finance, IndusInd Bank dip over 14%

Shares of banks and financial services companies declined up to 25 per cent on the National Stock Exchange (NSE) on Friday after the government placed YES Bank under moratorium and capped withdrawals for a month, while the Reserve Bank of India (RBI) superseded the private lender's board, citing a steady decline in its financial position.

The collateral damage on sentiment saw the Nifty PSU Bank index tank to an over 10-year low, falling 8 per cent in intra-day today. Nifty Bank index tumbled 5.7 per cent, followed by Nifty Private Bank index (5.6 per cent), and Nifty Financial Services (down 4.6 per cent), as compared to 3.9 per cent decline in the benchmark Nifty 50 index.

Among individual stocks, RBL Bank, IndusInd Bank, AU Small Finance Bank, United Bank of India, Corporation Bank, Allahabad Bank, Max Financial Services, Edelweiss Financial Services, Indiabulls Housing Finance, Shriram Transport Finance and PNB Housing Finance were down between 12 per cent and 20 per cent on the NSE.

The Ministry of Finance took the decision after considering an application submitted by the RBI, a ministry statement said on Thursday evening. The moratorium will last till April 3 and all legal proceedings against the bank will be stayed during the period, it said. The bank is not allowed to pay any depositor more than Rs 50,000 without written permission from the RBI during the period of moratorium.

Meanwhile, the board of directors of the State Bank of India (SBI) has given an in-principle approval to explore investment opportunity in Yes Bank Ltd., according to a statement filed with stock exchanges.

At 09:38 am, shares of SBI were trading 7 per cent lower at Rs 269, after falling 12 per cent intra-day to Rs 254 on the NSE. YES Bank was locked in lower circuit of 25 per cent at Rs 27.60 on the NSE. A combined 4.96 million shares have changed hands already and there were pending sell orders for 132 million shares on the NSE and BSE, exchange data shows.

“Media article suggests that SBI and Life Insurance Corporation of India (LIC) would buy 24.5 per cent each at Rs 2 per share amounting to Rs 490 crore (would have been better if capital infusion was higher, in our view) and appoint directors/managing direct on the board. This if true, would help assuage fears in the mind of deposit/bond holders and reduce ALM risk. What this also does, is provide a short lifeline for YES/new management to find a set of investors or else it would eventually be merged (post significant write-downs taken in YES's book),” analysts at Antique Stock Broking said in event update.

As of now, SBI's interest is likely to be in the form of investment only, implying limited financial impact on SBI, thereby excusing merger possibility in the near term, but one has to keep a track if no new investor is found, SBI may eventually have to bite the bullet, the brokerage firm said with retain SBI target price of Rs 400 but would monitor further developments and review our target price as clarity emerges, for us YES is not rated, it said.

YES BANK 27.65 36.85 -25.0
UNITED BANK (I) 6.14 7.48 -17.9
CORPORATION BANK 15.75 19.05 -17.3
RBL BANK 255.30 301.50 -15.3
ALLAHABAD BANK 11.05 12.96 -14.7
MAX FINANCIAL 518.50 605.05 -14.3
EDELWEISS.FIN. 76.80 86.35 -11.1
INDUSIND BANK 957.75 1074.70 -10.9
INDIABULLS HOUS. 256.00 285.45 -10.3
NIPPON LIFE IND. 349.30 385.10 -9.3
SREI INFRA. FIN. 6.52 7.18 -9.2
SHRIRAM TRANS. 1067.15 1174.95 -9.2
AU SMALL FINANCE 1070.60 1176.30 -9.0
MAGMA FINCORP 36.95 40.50 -8.8
PNB HOUSING 299.00 326.25 -8.4
EQUITAS HOLDINGS 93.45 101.90 -8.3
L&T FIN.HOLDINGS 98.40 106.85 -7.9
IDBI BANK 27.60 29.90 -7.7
DCB BANK 145.20 157.25 -7.7
CENTRUM CAPITAL 17.60 19.05 -7.6

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