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Macquarie sees possibility of a PSB taking over Yes Bank

‘Failure to raise funds poses danger to financial system’

With Yes Bank unable to firm up its capital-raising plan, and in case if it fails to do so in the next six months, there is a possibility of a public sector bank (PSB) being asked to take over the lender, broking firm Macquarie wrote in a note to its clients.

“If the bank is unable to raise money in the next six months, it poses a grave danger to the financial system,” Macquarie said.

Past takeovers

The brokerage house cited the example of two private sector lenders, Global Trust Bank and United Western Bank, which were taken over by state-run lenders Oriental Bank of Commerce and IDBI in the past.

“We need to see whether there is a run on bank deposits,” it said, noting that the bank’s deposit base had declined in the last couple of quarters. Yes Bank had been scouting for an investor for some time. The bank said it had received an investment proposal worth $2 billion from Erwin Singh Braich / SPGP Holdings, which continues to be under discussion and also a $500 million offer from Citax Holdings and Citax Investment Group.

Macquarie noted Yes Bank’s board meeting on Tuesday to discuss capital raising was inconclusive. Yes Bank’s stock tanked 15.33% on Wednesday to close at ₹42.80 on the BSE.

“It has been close to nine months since the new CEO Ravneet Gill took over and they are yet to raise money,” the brokerage observed, adding when Macquarie had done a roadshow in Hong Kong and Singapore in September this year, they had clearly said that none of the 40 investors whom they met wanted to give Yes Bank capital

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Printable version | Feb 29, 2020 10:00:33 AM | https://www.thehindu.com/business/macquarie-sees-possibility-of-a-psb-taking-over-yes-bank/article30279516.ece

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