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As part of RBI bailout, SBI to pick up 49% in Yes Bank

Long wait:Customers waiting to withdraw money from aYes Bank branch in Thane on Friday.Vibhav BirwatkarVibhav Birwatkar

Long wait:Customers waiting to withdraw money from aYes Bank branch in Thane on Friday.Vibhav BirwatkarVibhav Birwatkar  

Reconstruction scheme will protect jobs for a year; six-member board set up

The Reserve Bank of India (RBI) on Friday announced a draft reconstruction scheme for the beleaguered Yes Bank, aimed at protecting depositors’ funds while bringing in the State Bank of India as an investor. For employees of the bank, service conditions, including remuneration, will remain the same, at least for one year. This does not, however, include key managerial personnel, on whom the board can take a call.

According to the draft plan, the authorised capital for the reconstructed bank will be Rs. 5,000 crore, with 2,400 crore equity shares of Rs. 2 each, aggregating to Rs. 4,800 crore.

The SBI, which had earlier said its board was exploring an investment in Yes Bank, will pick up a 49% stake, according to the scheme. The deal would be at a price not less than Rs. 10 per share with a face value of Rs. 2. The SBI cannot reduce its holding below 26% before completion of three years from the date of infusion of the capital, the RBI said. To pick up a 49% stake, the SBI will have to invest Rs. 2,450 crore, sources said.

Moratorium

On Thursday, the government had put a moratorium on Yes Bank till April 3 following its deteriorating financial condition, and the banking regulator superseding the board and appointed an administrator.

The new board will have at least six members, an MD & CEO, a non-executive chairman and two non-executive directors, while the remaining two nominee directors would be appointed by the SBI. “The members of the board so appointed shall continue for a period of one year, or until an alternate board is constituted by Yes Bank Ltd., whichever is later,” the RBI said.

The Central bank said all the deposits and liabilities of the bank would continue in the same manner in the reconstructed bank, unaffected by the scheme. “All the deposits with andliabilities of the reconstructed bank, except as provided in the scheme, and the rights, liabilities and obligations of its creditors, will continue in the same manner and with the same terms and conditions, completely unaffected by the scheme,” it said.

However, additional tier 1 capital, which was issued by Yes Bank under the Basel III framework, “shall stand written down permanently, in full, with effect from the appointed date,” according to the scheme.

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