YES Bank falls for second straight day, down 15% against QIP price

Topics YES Bank

Shares of YES Bank were trading lower for the second straight day, down 7 per cent at Rs 71 on the BSE on Tuesday. The stock has fallen 10 per cent in the past two days, despite the company successfully raising Rs 1,930 crore through the qualified institutional placement (QIP) route last week.

The stock was trading 15 per cent lower than its QIP price. The private sector lender's share price is less than 1 per cent away from its 52-week low level of Rs 70.50, touched on August 14, 2019 in intra-day deal.

Meanwhile, CG Power and Industrial Solutions today recognised "unauthorised transactions" and related financial irregularities in the company. YES Bank holds 12.79 per cent stake in CG Power.

On August 16, the bank had allotted 231 million equity shares of face value of Rs 2 each to eligible qualified institutional buyers (QIBs) at Rs 83.55 per equity share. The QIP was oversubscribed three times and will take the bank’s common equity tier-1 capital ratio to 8.6 per cent from about 8 per cent a few months ago.

Earlier this month, global rating agency Moody's reiterated its decision to keep its ratings "under review for downgrade" for the second time in under two months, citing worsening asset quality and higher exposure to shadow banks. Given the review for downgrades, Moody's is unlikely to upgrade the bank's ratings over the next 12-18 months.

Moody's could downgrade YES Bank's ratings if there is a sustained deterioration in its impaired loans or loan-loss reserves, or if the rate of new non-performing loans formation is significantly higher than previously experienced; or the bank's capital ratios decline because of its inability to raise new capital, or both, the rating agency said in a release.

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