Yes Bank Seeks New Promoter, Sets Eyes On $8-9 Billion Valuation: Report

Yes Bank Seeks New Promoter, Sets Eyes On $8-9 Billion Valuation: Report

Any new promoter seeking a stake greater than 26 per cent, they need special permission from the Reserve Bank of India (RBI).

Oliviya KunjumonUpdated: Thursday, March 14, 2024, 01:07 PM IST
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Representative Image | YES Bank

Following reports regarding the bank's plans to search for a new owner, the shares of Yes Bank saw a slight dip of almost 1 percent on the National Stock Exchange (NSE) Thursday morning.

However, by 9:30 am, the stock had rebounded and was up by 2 percent. As of 12:15 pm IST, the shares of Yes Bank were trading at Rs 22.50, reflecting a rise of 7.40 percent.

Hunt for New Promoter

Yes Bank is on the lookout for a new promoter, aiming to sell up to 51 per cent of its stake at a target price of USD 8 to 9 billion, according to Livemint report.

This move marks a rise above its current market capitalization of USD 7.2 billion. The search for a new owner has attracted attention from various financial institutions, with Citigroup's India unit playing an important role in easing the process.

International Interest

Yes Bank has started discussions with various banks and financial institutions in Japan, West Asia, and Europe, inviting them to consider acquiring at least a 51 per cent stake in the bank. Furthermore, some Japanese banks have already commenced due diligence processes, reflecting the growing international interest in India's banking landscape, as per Livemint report.

Rules to Follow

But there are rules to follow. Any new promoter seeking a stake greater than 26 per cent, they need special permission from the Reserve Bank of India (RBI).

Transformation Post-2020 Crisis and Strategy for Major Shareholders

The prospective stake sale presents an opportunity for major shareholders, including State Bank of India (SBI) (29 per cent), Life Insurance Corp. Of India (LIC) (4.34 per cent), HDFC Bank Ltd. (3 per cent), and ICICI Bank Ltd. (2.6 per cent), to potentially exit their investments in Yes Bank. These institutions had intervened in 2020 to rescue Yes Bank from a financial crisis, and now, the bank is poised for a fresh chapter under new ownership.

The Bank has underwent a change in ownership in 2020, with major stakeholders like State Bank of India (SBI) stepping in to prevent its collapse. The change in ownership has had a positive impact on Yes Bank's financial performance. Profits have surged, and the bank's net interest margin (NIM) has shown improvement and a shift towards safer lending practices.

Challenges and opportunities

While the bank's performance has improved, but there are still some worries, especially about the quality of the loans the bank has given out. Yes Bank is working to fix any problems and make sure things are stable.

Overall, finding a new owner could be a big step for Yes Bank. It could mean more competition in the banking world and better services for customers. But it all depends on finding the right buyer and making sure everything is done properly.

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