Moody’s Investors Service has downgraded Yes Bank’s foreign currency issuer rating to Ba1 from Baa3. It has also downgraded Yes Bank’s baseline credit assessment (BCA) and adjusted BCA to Ba2 from Ba1.
“The rating action considers the resignation of various members of the bank’s Board of Directors — which, when seen in conjunction with the Reserve Bank of India’s (RBI) directive in September 2018 to restrict the term of the bank’s MD&CEO as well as founder, Mr. Rana Kapoor, till 31 January, 2019 — have raised Moody’s concerns over corporate governance,” the rating agency said.
In Moody’s opinion, although the bank’s reported credit fundamentals remain stable, the developments surrounding the transition in leadership as well as the governance issues are credit negative because they complicate management’s effective implementation of the bank’s long-term strategy.
Furthermore, these developments could constrain the bank’s ability to raise new capital, Moody’s said.
