YES Bank gains over 30% for second straight day, up 424% from Friday's low

Brokerage firm Nomura said the main focus in the near-term will be on the new investors of the restructured YES Bank
Shares of YES Bank rallied over 30 per cent for the second straight day and surged 39 per cent to Rs 29.60 on the National Stock Exchange (NSE) on Wednesday. 

YES Bank's stock price has surged a mammoth 424 per cent from Friday’s low of Rs 5.65, after the government-owned State Bank of India (SBI) said it will pick a 49 per cent stake in the troubled private lender as part of a revival scheme framed by the Reserve Bank of India (RBI).

At 12:03 pm, YES Bank was trading 28 per cent higher at Rs 27.25 on the back of heavy volumes. In comparison, the benchmark Nifty50 index was up 0.3 per cent at 10,482. The counter has seen huge trading volumes with a combined 265 million shares, representing 10 per cent of YES Bank's total equity, changing hands on the NSE and BSE so far.

YES Bank has 255 crore shares of Rs 2 per share. SBI will be issued 245 crore shares at a price of Rs 10 per share for Rs 2,450 crore. This will be 49 per cent of the share capital of the Reconstructed Bank. SBI shall not reduce its holding below 26 per cent before completion of three years from the date of infusion of the capital,” SBI said in a press release.

Meanwhile, YES Bank has enabled its inward IMPS/NEFT services. Customers can now make payments towards YES Bank credit card dues and loan obligations on other accounts. Earlier, the new YES Bank administrator Prashant Kumar had said that the moratorium imposed by the RBI could be lifted before the end of this week.

Brokerage firm Nomura said the main focus in the near-term will be on the new investors of the restructured YES Bank, the risk of deposit exodus from this entity and on writedowns due to YES Bank's failure. Even if the restructured YES Bank lowers near-term market concerns, we believe broader financial stability risks remain.

“Post SBI’s initial capital infusion, we expect considerable participation from other private investors. Unlike in the past instances, when failing banks (Global Trust Bank, United Western Bank) were merged with other sound banks, the government’s intention this time is to ensure that Yes Bank is revived to the extent that it is able to operate independently,” analysts at Nirmal Bang Equities said.

Contrary to what was anticipated earlier, a merger with SBI is out of the question. Given the value of Yes Bank’s brand, tech platform, corporate banking platform, among others, the bank is capable of sustaining itself. As per SBI chief, the bank has a competent and professional management team which will take over the functioning of the bank once it is out of administration, the brokerage firm said.

According to a report by TV channel CNBC Awaaz, the lender is expected to attract investments from marquee names in the financial and investment industry including ICICI, HDFC, Rakesh Jhunjhunwala and RK Damani.

The proposals have been sent to RBI, which will review and decide by March 12 whether to grant approvals. If approved, an announcement could come in this week, CNBC Awaaz reported, quoting sources.

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