Table of Contents
- Yes Bank Limited is an Indian private sector bank.
- Founded by Rana Kapoor and Ashok Kapur in 2004.
- It primarily operates as a corporate bank, with retail banking and also asset management as subsidiary functions.
BOND PRICES OF YES BANK
- Yes bank has slumped by a record in the bond market this month.
- Dollar bonds of Yes Bank Ltd., slumped a record 5.5 cents to 80.9 cents on the dollar, the lowest since the bonds were sold in 2018.
WHEN THE CRISIS STARTED?
- Crisis at Yes Bank started last year when RBI demanded the bank’s founder Rana Kapoor to step down as CEO.
- It was following a spat over breaches of confidentiality and regulatory guidelines revealed in their inspections.
- Since then the Bank witnessed an 81% decline in its market stock price.
- Till now, nearly 40 brokerage firms have given negative ratings to Yes Bank stocks.
WHAT IS THE PROBLEM?
- Yes Bank has the highest stress among banks (both private and public) with estimated stress of 54.5% of reported net worth of financial year 2018-19 with total exposure of Rs 147 billion as of 2018-19.
- This is followed by Bank of Baroda with 37% stress with Rs 189 billion exposure and Indusind Bank has 30.4% stress against 81 billion exposure.
NBFC PROBLEM
- The bank is at the epicenter of rising stress in India’s credit markets, where shock defaults last year by a major infrastructure lender have led to broader strains at other shadow banks.
- Furthermore, Yes Bank also has highest exposure towards entities classified as high-risk such as
- ADAG (Finance), Cox & Kings, CG Power, DHFL, Essar Shipping and Mcleod Russel, which was reported as Rs 102.6 billion.
- “The stock and bonds both are reflecting investor concerns on asset quality, where slower resolutions and rising stress could continue to pose pressure,” said Diksha Gera, a Bloomberg Intelligence analyst.
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