Yes Bank stock price hits 10% lower circuit as FPO shares list for trading; Partha Pratim resigns as Director

Private sector lender Yes Bank’s shares were locked in a 10% lower circuit on Monday as the lender’s follow-on public offer (FPO) shares were listed on stock exchanges. The stock was trading at Rs 12.30 per share, down from its previous close of Rs 13.65 apiece. The Rs 15,000 crore FPO of Yes Bank subscribed 95%, in what was referred to as a buoyant response to a bank that was struggling for cash earlier this year. Yes Bank shares have tanked 54% since the beginning of this month.

“The Capital Raising Committee of the Board of Directors of the Bank at its meeting held (on July 23, 2020) has approved the allotment of 12,50,44,33,750 Equity Shares of face value of ₹ 2 each, for an amount aggregating to ₹ 15,000.00 crores, pursuant to the Offer,” the bank informed the bourses. Further, post the FPO the paid-up equity share capital of Yes Bank now stands increased from Rs 25,100,944,462 to Rs 50,109,811,962. A large number of private and public lenders have been vying to raise capital, after the Reserve Bank of India asked them to gear up to face challenges ahead and conduct a stress-test to assess their capital requirements.

Yes Bank’s efforts to raise capital were termed as credit-positive by rating agency Moody’s. “The capital raise is credit positive because it strengthens the bank’s capitalization and loss-absorbing buffers and will reduce default risk for its creditors,” Moody’s said earlier this month. Analysts have highlighted that the successful effort that Yes Bank put forth to raise capital is testament to the fact that the lender has regained access to external market funds. The capital raising through FPO will help align Yes Bank’s Common Equity Tier 1 ratio with other private sector peers.

Along with the shares being locked in a lower circuit, the bank dealt another jolt in the form of Partha Pratim Sengupta, a Non-Executive Director, nominated by State Bank of India tendering his resignation. Sengupta had joined Yes Bank in March when the bank was being reconstructed by the Reserve Bank of India and State Bank of India. The banker will now be joining as MD & CEO of Indian Overseas Bank.

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