We are all well aware of the downfall of Yes Bank by now. However, being the 4th largest private lender bank of India, the government can’t afford it to collapse. Hence, RBI on 5th March 2020 has taken full control over Yes Bank and has also implemented several measures in order to revive it including a one-month moratorium which was imposed on 5th March restricting withdrawals to Rs 50,000 per depositor. The moratorium, nonetheless, was revoked on April 3rd.
Eight banks come in rescue of Yes Bank
Talking about the recent reports, when the Yes bank was in sore need of capital, eight institutions have come forward and invested in its shares rightfully demonstrating the proverb ‘a friend in need is a friend indeed’.
As per the data revealed on stock exchanges in early March, SBI became the leading investor in Yes Bank subscribing to 605 crore shares at Rs 10 per share. The other major investing institutions at Rs 10 per share were HDFC Ltd and ICICI Bank for 100 crore shares each, Axis Bank for 60 crore shares, Kotak Mahindra Bank for 50 crore shares, Bandhan Bank and Federal Bank for 30 crore shares each and IDFC Bank for 25 crore shares.
Three of the banks sold part of their stakes within a few days of investment
However, the exchanges’ data disclosed as on 31st March showed that three of eight banks sold small parts of their stakes even before the fortnight of investment at a much higher price as the Yes Bank shares ranged for as low as Rs 22 per share and closed at Rs 87 per share between March 17 and March 31. The average price stood at Rs 42 per share. Hence, if evaluating that the Federal Bank, IDFC First Bank, and Kotak Bank sold their shares at this price, they would have recovered 82%, 67%, and 40%, respectively, of their entire investment in Yes Bank.
Under the RBI’s reconstruction scheme for Yes Bank, the investment made at Rs 10 per share will go for a three-year lockdown in which the investors won’t be allowed to sell more than 25% of their shares in the bank. Therefore, the lenders can’t be objected as they have sold their shares abiding by the scheme.
Making an initial investment of 300 crores on March 13, Federal Bank as of March 31st holds 24.13 crore shares, selling 5.87 crore shares within 14 days. Kotak Mahindra Bank, on the other hand, sold 4.76 crores of its 50 crore initial shares, coming down to owning 45.28 crore shares as of now. Accompanying the two banks, IDFC First Bank too, sold its 4.02 of 25 crore shares, coming down to 20.98 crore shares now.
Nonetheless, SBI has made a commitment to not sell a single share before the completion of the three-year lockdown period.
Meanwhile, ICICI Bank which initially made an investment for 100 crore shares increased it by buying another 2 lakh shares as per the data of March 31st.
The other banks did not sell any stake as of March 31 data available on exchanges.