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Yes Bank

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YES BANK
Company typePublic
BSE: 532648
NSE: YESBANK
ISININE528G01035
IndustryBanking, Financial services[1]
Founded2004; 20 years ago (2004)
FounderRana Kapoor; Ashok Kapoor
HeadquartersMumbai, Maharashtra, India
Key people
Products
RevenueIncrease₹329.61 billion (US$3.9 billion) (2024) [2]
Increase ₹33.86 billion (US$410 million)[2] (2024)
Increase ₹12.51 billion (US$150 million)[2] (2024)
Total assetsIncrease ₹4.05493 trillion (US$49 billion) (2024)
Total equityIncrease ₹421.4539 billion (US$5.0 billion)[3] (2024)
Number of employees
28,001 (2024)
Capital ratio18% [4]
Websitewww.yesbank.in

Yes Bank (stylised as YES BANK) is an Indian private sector bank, headquartered in Mumbai, catering to retail customers, MSMEs, and corporate clients. The bank was founded by Rana Kapoor and Ashok Kapur in 2003.[5] Its network is spread across 300 districts in India and comprises 1,198 branches, 193 BCBOs and 1,287+ ATMs.[6][7]

Among the bank’s major shareholders are the State Bank of India, the country’s largest scheduled commercial bank; two global investors viz affiliate of The Carlyle Group and Advent International, among others.[8]

Yes Bank has an ESG Score of 74 (on 100) on the S&P Global Corporate Sustainability Assessment (CSA), one of the highest in the Indian banking industry.[9]

History

It was founded in 1999 by two Indian bankers. Ashok Kapur, who had previously worked as the national head for the ABN Amro Bank and Harkirat Singh, who had previously worked as the country head for the Deutsche Bank. The Rabobank in the Netherlands held the remaining 75% of the shares in the non-banking financial business. The three Indian promoters each owned 25% of the company. In 2003, it was rebranded as the Yes Bank. It was also the same year that Harkirat Singh resigned due to concerns over the influence exercised by Rabobank in the hiring of CEO and executive chairman positions.[10]

Yes Bank had been unable to raise capital over the past few years, which led to a steady deterioration in its financial position. This had resulted in potential loan losses, which in turn led to downgrades, which prompted investors to invoke bond covenants, and a withdrawal of deposits by customers. Over the course of the previous four quarters, the bank racked up losses and very little income.[11]

The bank's management, under the new leadership of Kumar, immediately repositioned itself and dealt with all internal and market related challenges to restore customer and depositor confidence.[12] Under the coordinated efforts of the new board and management, Mehta assured shareholders of a speedy recovery, even as the Reserve Bank of India (RBI), State Bank of India (SBI), HDFC Bank, ICICI Bank, Axis Bank and other banks lent it support through the historic Yes Bank Reconstruction Scheme 2020.[13]

In July 2020, Yes Bank Ltd closed their follow-on public offer (FPO) with 95% subscription, driven by institutional investors.[14]

As of 28 July 2020, Yes Bank is an associate of State Bank of India which has a 30% stake in the company.[15]

On 21 February 2023, it issued 2,13,650 equity shares to its employees under the company ESOP plan.[16]

The bank plans to open 150 branches in fiscal 2024, with 110 branches open as of March 2024. It also plans to expand its range of business lines, adding affordable housing and used car loans to its luxury property mortgage and new car purchase lending segments.[17]

It has also reached a base of 2 million credit cards by March 2024, issuing more than 50,000 cards annually in recent years.[17]

Ownership Structure

The ownership structure of the bank is diverse, with both institutional and retail shareholders holding significant stakes. The State Bank of India (SBI), the largest scheduled commercial bank in India, is the largest shareholder, holding 23.99% of the shares. This substantial stake underscores SBI's pivotal role in the Bank's governance and strategic direction.[18]

It has also attracted significant investments from prominent international private equity firms, namely Advent International and The Carlyle Group. These firms have fortified bank’s capital base, bolstering its long-term strategic goals. Their involvement began with one of the largest private capital-raising events by an Indian private sector bank in 2022, positioning them as key stakeholders in YES BANK.[19]

Additionally, it commands an extensive retail shareholder base, boasting the largest number of retail shareholders in the Indian capital market. With approximately 6.30 million shareholders, this vast base reflects widespread confidence and trust in the Bank's vision and performance.[20]

Shareholding Pattern

Investor Type Percentage
State Bank of India (SBI) 23.99%
Verventa Holdings Ltd 9.2%
CA Basque Investments 6.84%
Life Insurance Corporation of India (LIC) 3.96%
HDFC Bank 2.75%
ICICI Bank 2.39%
Kotak Mahindra Bank 1.21%
Axis Bank 1.01%

Operations

Yes Bank operates in Retail, MSME and Corporate banking sectors from 1,192 branches and 1,301 ATMs and Cash recyclers in over 700 Cities. It offers wide range of differentiated products for corporate and retail customers through retail banking and asset management services.[21] On 5 March 2020, in an attempt to avoid the collapse of the bank, which had an excessive amount of bad loans, the Reserve Bank of India (RBI) took control of it. RBI later reconstructed the board and named Prashant Kumar, former chief financial officer and deputy managing director of State Bank of India, as MD & CEO of Yes Bank, along with Sunil Mehta, former non-executive chairman of Punjab National Bank, as Yes Bank's non-executive chairman.[22][23][24][25]

In October 2017, the bank launched a digital wallet known as Yes Pay, integrating with BHIM and UPI.[26] On 3 November 2017, Yes Bank signed a MoU with the government to provide ₹1,000 crore (equivalent to ₹14 billion or US$170 million in 2023) financing for food processing projects.[27]

As of September 2018, Yes Bank had taken syndicated loans from eight large international entities including ADB, OPIC, European investment bank, banks in Taiwan and Japan for amounts ranging from US$30 million to US$410 million.[28][29]

It also partnered with the US government-based OPIC and with Wells Fargo to support women entrepreneurs.[30]

Yes Bank provides (UPI) Unified Payments Interface facility to allow customers to easily and securely perform various financial transactions from their mobile devices via third-party app providers like PhonePe and Yuva Pay.[31][32]

According to the data shared by NPCI (National Payments Corporation of India), Yes Bank processed 25.94 million transactions amounting to ₹148.11 billion (US$1.8 billion) through its own UPI app in July 2021.[33][34]

Yes Bank acquired over 24.19% stake in Dish TV, India's largest direct-to-home (DTH) company in terms of subscribers, on 30 May 2020.[35]

On Mar 18 2024, YES Bank became the Official Banking Partner for Team India at the Paris Olympics 2024, launching the 'Milkar Jitayengey' campaign and the 'YES Glory Debit Card' for athletes.[36]

On May 7, 2024, Yes Bank partnered with Ebanx - a fintech focused on cross-border e-commerce payments to enable payments from India.[37]

Subsidiaries

It has three subsidiaries – YES Securities (India) Limited,[38] YES Trustee Limited and YES Asset Management (India) Limited.[39]

Moratorium

On 5 March 2020, the Reserve Bank of India (RBI) announced that, in the interest of its customers and depositors, it would suspend and supersede Yes Bank's board and impose a 30-day moratorium on its operations.[40] The RBI cited Yes Bank's failures to raise new funding to cover its non-performing assets, inaccurate statements of confidence in its ability to receive new funding, and its underreporting of its non-performing assets, among other factors, as the reasons for the moratorium.[41]

During this period, Yes Bank customers could withdraw only up to ₹50,000 (US$600) from their accounts for the following one month, except in certain situations like medical treatment, emergencies, higher education costs and obligatory expenses for ceremonies such as weddings (subject to RBI's approval).[42]

RBI governor Shaktikanta Das stated that the matter would be resolved swiftly; Ministry of Finance under Finance Minister, Nirmala Sitharaman announced a proposed turnaround plan under which the State Bank of India would take a 49% stake in Yes Bank and introduce a new board.[43][41][42][44]

The moratorium disrupted multiple e-commerce services whose users were struggling to make online transactions or use popular payment services like UPI.[45][46][47]

Almost two weeks later (12 days), the bank came out of the moratorium and resumed full-fledged banking operations from 18 March 2020. This came after a consortium of eight public and private banks, led by State Bank of India, agreed to infuse capital into Yes Bank. And barely nine months after the imposition of the moratorium, Yes Bank was on the road to recovery. The bank's operating profits and recoveries were sufficient to provide for credit costs and it would not need to consume capital for further operations.[48][49]

On 13 March 2020, the Union Cabinet approved the reconstruction scheme for Yes Bank, stating that within three days of the notification of the scheme, the moratorium would be lifted.[50] During this reconstruction, seven investors infused ₹12,000 crore (equivalent to ₹140 billion or US$1.7 billion in 2023) in Yes bank and Prashant Kumar was proposed as new CEO of the bank. These investors include State Bank of India, ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Rakesh Jhunjhunwala, Radhakishan Damani and Azim Premji trust.[51]

On 6 March 2020, ICRA downgraded the rating of Yes Bank's ₹52,600 crore (equivalent to ₹620 billion or US$7.4 billion in 2023) in core bonds to a "D" rating, while Moody's downgraded them to "Caa3".[52][53][54]

In April 2021, India's market regulator SEBI (Securities and Exchange Board of India) proposed a fine of ₹25 crore (equivalent to ₹28 crore or US$3.4 million in 2023) on Yes Bank Ltd., stating it had fraudulently sold certain risky bonds without the necessary warnings and risk assessments.[55][56] In May 2021, the Securities Appellate Tribunal (SAT) imposed an interim stay on SEBI's order.[57]

Listings

Yes Bank has equities listed on the Bombay Stock Exchange and the National Stock Exchange of India and bonds listed on the London stock exchange. Yes Bank was listed on the stock exchanges of India after its IPO in June 2005 at a face value of ₹10 and an issue price of ₹35.[58][59]

Reconstruction

Under the new management, Yes Bank has managed to overhaul its risk and governance frameworks while saving itself from reputational risks. The liquidity profile of the bank is well above the required regulatory norms.[60]

In June 2021, the board approved ₹100 billion (US$1.2 billion) of fundraising by issuance of debt securities.[61]

In financial year 2020–21, Yes Bank saw a marked rise in deposits at 55% and operating profits at 42% year on year. The recapitalization drive at the bank generated ₹150 billion (US$1.8 billion) via follow-on public offers in July 2020.[62] Yes Bank continues to focus on digital payments, concentrating on its market share in UPI and IMPS transactions while it plans to disburse ₹100 billion (US$1.2 billion) in retail and MSME loans in Q3 of FY21.[63]

In September 2016, Yes Bank scrapped its proposed $1 billion share sale due to market conditions.[64][65] The company subsequently attempted to relaunch its failed capital raising exercise after appointing a new set of bankers.[66][67]

Ratings Upgrade

In September 2020, ICRA upgraded its ratings on securities issued by Yes Bank Ltd, factoring in various positive developments in the bank's financial profile.[68] Infrastructure bonds and Basel II compliant lower tier II bonds were raised to ‘BBB’ from ‘BB+’. Basel III compliant tier II bonds were upgraded to ‘BBB−’ from ‘BB’. Basel II compliant tier I bonds and upper tier II bonds were upgraded to ‘BB’ from a default rating previously.[69]

In August 2020, Moody's too had raised Yes Bank's long term issuer rating by a notch to B3 from Caa1.[70] In November 2020, CARE Ratings revised its rating on the YES Bank's infrastructure bonds to 'CARE BBB' from the previous 'CARE B'.[71] It also revised its outlook to 'Stable' from the previous ‘Under credit watch with developing implications’ on the above-mentioned instruments. Yes Bank's Upper Tier II Bonds and Perpetual Bonds (Basel II) received a revised rating of 'CARE BB+' from previous 'CARE D'.[72]

See also

References

  1. ^ Annual Report 2017–18. Mumbai: Yes Bank Limited. Retrieved 14 October 2018.
  2. ^ a b c "Yes Bank Ltd. Financial Statements" (PDF). bseindia.com.
  3. ^ "Yes Bank Balance Sheet, Yes Bank Financial Statement & Accounts" (PDF). www.bseindia.com.
  4. ^ "Balance Sheet 31.03.2018" yesbank.in (17 March 2018).
  5. ^ "The backbone of India's economy: How YES BANK Supports MSMEs - CNBC TV18". CNBCTV18. 9 August 2024.
  6. ^ "Yes Bank Report" (PDF). BSE India.
  7. ^ Mehta, Riju (18 May 2024). "YES Bank launches YES Grandeur for elite customers". The Economic Times.
  8. ^ "Will SBI offload its entire 26.14% stake in Yes Bank after RBI's lock-in period ends? - Details". Times Now. 6 March 2023.
  9. ^ "Yes Bank Limited ESG Score". Spglobal.com.
  10. ^ Dutta, Prabhas (9 March 2020). "Rapid rise and free fall of Yes Bank in 10 years after co-founder died in 26/11 attack". India Today. Retrieved 31 January 2023.
  11. ^ Adhikari, Anand (5 March 2020). "Why did Yes Bank collapse? Here are 6 main reasons". Business Today. Retrieved 31 January 2023.
  12. ^ "Yes Bank Chairman Sunil Mehta assures speedy recovery, thanks RBI, SBI, HDFC Bank, ICICI Bank for lending support". Zee Business. 11 September 2020. Retrieved 6 November 2021.
  13. ^ "Union Cabinet approves Yes Bank reconstruction plan". The Economic Times. Retrieved 6 November 2021.
  14. ^ Dhanjal, Swaraj Singh; Ramarathinam, Ashwin (17 July 2020). "Yes Bank manages to close its FPO with 95% subscription". mint. Retrieved 6 November 2021.
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  16. ^ Market, Capital (21 February 2023). "Yes Bank allots 2.13 lakh equity shares under ESOP". Business Standard India. Retrieved 23 February 2023.
  17. ^ a b "Yes Bank is sufficiently capitalised for FY25: Prashant Kumar, MD and CEO". Businessline. 6 March 2024. Archived from the original on 12 March 2024. Retrieved 13 March 2024.
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  27. ^ "Yes Bank signs MoU with govt for Rs 1,000 cr financing". The Economic Times. 3 November 2017. Retrieved 11 April 2018.
  28. ^ "OPIC Signs Loan Agreement with Yes Bank to Support Small Business Growth in India" (Press release). OPIC. Retrieved 29 September 2018.
  29. ^ "Investor presentation 2018–19". Yes Bank. Retrieved 29 September 2018.
  30. ^ "Yes Bank partners with OPIC and Wells Fargo to Support Financing of Women Entrepreneurs and SMEs" (Press release). OPIC. Retrieved 29 September 2018.
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  33. ^ "UPI Ecosystem Statistics". National Payments Corporation of India. Retrieved 13 November 2021.
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  35. ^ Laghate, Gaurav. "YES Bank acquires 24% in Dish TV by invoking share pledges". The Economic Times. Retrieved 13 November 2021.
  36. ^ "Yes Bank partners Ebanx to facilitate cross-border e-commerce for customers". The Times of India. 7 May 2024. ISSN 0971-8257. Retrieved 27 October 2024.
  37. ^ "Yes Bank partners Ebanx to facilitate cross-border e-commerce for customers". The Times of India. 7 May 2024. ISSN 0971-8257. Retrieved 27 October 2024.
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  40. ^ Deb, Rajat (1 June 2021). "YES Bank fiasco: a corporate governance failure". Decision. 48 (2): 181–190. doi:10.1007/s40622-021-00277-7. ISSN 2197-1722. S2CID 235507891.
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  44. ^ "Yes Bank withdrawals capped at Rs 50,000. Do these exceptions apply to you?". India Today. Retrieved 6 March 2020.
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  57. ^ Kaul, Abhinav (24 May 2021). "SAT stays Sebi penalty order in Yes Bank case". mint. Retrieved 2 July 2021.
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  60. ^ "Yes Bank CEO: Yes Bank committed to culture of accountability; working on risk, governance after bailout". The Times of India. PTI. 18 August 2020. Retrieved 8 November 2021.
  61. ^ Gopakumar, Gopika (10 June 2021). "Yes Bank board approved fund raising of Rs10,000 cr by issue of debt securities". mint. Retrieved 8 November 2021.
  62. ^ "YES Bank to disburse ₹10,000-crore retail, MSME loans in Q3". @businessline. December 2020. Retrieved 8 November 2021.
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  65. ^ "Yes Bank's opportunism is to blame for failed share sale". The Economic Times. 10 September 2016. Retrieved 14 October 2017.
  66. ^ Modak, Samie; Anand, Nupur (20 October 2016). "Yes Bank may appoint new i-banks for QIP". Business Standard. Retrieved 14 October 2017.
  67. ^ Ramchandani, Kumar; Jethwani, Kinjal (1 January 2021). "Yes bank: an untold story". Emerald Emerging Markets Case Studies. 11 (1): 1–37. doi:10.1108/EEMCS-04-2020-0123. ISSN 2045-0621. S2CID 235545683.
  68. ^ Nair, Vishwanath (11 September 2020). "ICRA Upgrades Yes Bank On Improved Financial Profile". BloombergQuint. Retrieved 8 November 2021.
  69. ^ Nair, Vishwanath (3 August 2020). "Moody's Upgrades Yes Bank's Rating After FPO". BloombergQuint. Retrieved 8 November 2021.
  70. ^ "Moody's upgrades Yes Bank to B3 following equity capital raising; outlook stable". Moodys.com. 3 August 2020. Retrieved 8 November 2021.
  71. ^ "Yes Bank Limited". Care Ratings. Retrieved 8 November 2021.
  72. ^ "YES Bank Shares Hit 5% Upper Circuit As CARE Upgrades Debt Instrument Rating". Moneycontrol. 10 November 2020. Retrieved 8 November 2021.

Further reading

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