“According to RBI norms, banks have to disclose divergences if the additional provision requirement, following the regulatory inspection, exceeds 15% of the net profit and/or additional gross NPAs identified by RBI exceed 15% of the published incremental gross NPAs for the reference period.”
Strange, when we have the above RBI norm. Above 15% divergence - one must disclose. Does it not become confidentiality issue then?
Perhaps they don’t want to create more panic in the already panicky environment. But a good news should be disclosed to give comfort to investors. A negative news could be released timely after considering every possible scenario.
This is beyond funny! the mgmt was after market cap is beyond any doubt. To an extent this is required for any bank looking to raise capital but in this desperation they selectively released RBI letter. Clearly, RBI believes that someone is trying to play the market heavily so they want to clear their name by rebuking YB Mgmt. To an extent they are right and now in the name of full transparency YB mgmt should release full letter after taking due permission from RBI. I am sure that will be super fun.
Perhaps the only way to play this stock is being contra with low exposure. On the one hand we have an excellent franchise business with high growth history and large run way. On the other, we do not know how deep the rut is.
I took a small exposure today after the asset quality report and subsequent run up. It may not be a news worth sharing for RBI. But from a shareholder’s perspective having discounted the stock to potential high NPA levels in the current price, no divergence is probably the best news. This gives huge comfort to hold the stock considering the management is walking the talk and they have corrected their mistakes within 2 years. This gives back huge credibility to the mnanagement who almost lost it all. Other governance issues along with share pledge and clashing businessninterest issues of the promoter group will hopefully go out with Rana Kapoor and the bank can become professionally managed from here.
I do not understand why RBI wants to keep the shareholders in the dark and what interest does it serve them. Being a public organization, they should rather make every report public and let shareholders decide whether they are comfortable with the risk exposure.
Utmost stupidity by RBI. RBI made yes bank disclose the divergences for 2016 and 2017. In 2018 RBI didn’t extend the CEO without disclosing any reason to the public. This led to stock crash and speculation about divergences for 2018. Now RBI gives the divergence report as confidential. How the public would know what the divergences are and what led to the curtailing CEO? As claimed in today’s letter, is RBI really working for benefit of public or against public?
BTW, should the divergence report be for the public or for the management only, what is common sense? if it is confidential, what purpose does it serve, since the public would never know the true divergence?
Good thing is the NIL divergence is true and reconfirmed by RBI today.
Did RBI came back heavily on Yes bank today for disclosing the divergences for 2018 because people are questioning why it removed Rana Kapoor, and it didn’t have any answer? Is it trying to prove it’s authority by shouting and threatening instead of data?
For the serious lapses and regulatory breaches claimed by RBI, most trusted banks have in plenty, for example couple of days ago,
This is a pretty crazy letter from RBI. Is the Bank not supposed to share such an important update with the investing public ? This was a key event which was leading to intense speculation about the future of the Bank. Is it a good thing that such a big piece of uncertainty is allowed to linger about for a prolonged period for a lending institution? In my opinion it isn’t!
During the subprime crisis, Federal Reserve in the US had the back of its banks (built confidence in the system) because it knew if any one banking institution failed, it’d wreak havoc on the whole banking system and create a sort of domino effect!
And here we have our central bank, refusing to divulge information in a timely and straightforward manner as a confidence building measure!
RBI has publicly bashed banks and their leadership under previous 2 governors…then why doesn’t it acknowledge banks which have taken corrective action now? Getting acknowledged for own efforts is also a crime now?
Investors were already aware of the “several other lapses and regulatory breaches in various areas of the Bank’s functioning” without exact nature or extent of these breaches. What they were not aware of was the extent of divergences in FY 18. Investors automatically assumed that since CEO was fired, there must have been huge divergences on top of already high NPAs for FY 18. That didn’t turn out to be the case.
Now I am confused about what these breaches exactly are? How can we have NIL divergences when there are several other lapses and regulatory breaches in various areas of bank’s functioning? Is RBI going to disclose that? While Yes bank is trying to clear the clouds, RBI is making the water muddy again.
RBI hasn’t said what regulatory action it is likely to take. There is no CEO to fire this time as the new CEO hasn’t started on his job yet. May be they will take over the IR function of Yes Bank?
You seem to be clearly ignoring the fact that YB promoters have complex structure like DHFL promoters to use pledge for financing their private businesses. It is in their vested interest to play the market up. If it is indeed in the interest of all investors they would have released full details of the letter. RBI on its part is right to be concerned that one bank promoter is using regular regulatory comm. for its vested interests. At least it appears to be the case. How many adverse letters from RBI have they released in the past? At this point SEBI must intervene and check positions of various entities who benefited from this 30% pop in a day.
You seem to be clearly ignoring the fact that Yes Bank has been communicating all adverse letters, reports, everything that has unraveled in the last 6 months, NPA divergence, CEO ouster, Independent Directors resigning, promoter fued, senior mgmt resignation (Pralay Mandal), and this last one warning of further regulatory action.
I understand communicating all news, whether good or bad from investor’s point of view, is not a favor to investors or general public but a duty.
But at the time of those negative revelations, you were quoting Mr Hemendra Hazari & UBS reports as confirmation/prophecy of all the bad things happening at Yes and as a justification of your negative stance.
Now when the Bank is emerging out of all the adversities & uncertainties one by one, you are blaming the forthcoming way with which it is reporting the positive news.
This means you don’t have a problem with the quantum or timeliness of disclosures but that the news flow is slowly turning positive instead of staying negative. Sorry but could you confirm your position in the stock along with commenting on it?
You could roll up few messages to see my disclosure when I said that " I am not playing for the bounce even" forget about “investing” here and I am consistent here for the last 4 yrs. I find it funny but you are not the only one who question the naysayers on this forum.
Coming to your assertion that there is difference between material development required to be disclosed as per the law like … “NPA divergence,CEO ouster, Independent Directors resigning, promoter fued, senior mgmt resignation (Pralay Mandal)” and just meeting a compliance requirement i.e. no divergence. So much for a brilliant banker that just complying with divergence becomes a cause for celebration.
What is the key difference between DHFL and Yes bank is just a systematically important retail banking ops. which can’t be allowed to go under. Without that it would have seen same controlled liquidation as it is unfolding in DHFL. At least the promoters have made a safety net for themselves by running a diversified fin in private capacity while minority investors are left to celebrate small mercies.
A small and mid cap in any other sector would have become penny stock with the kind of issues we face here. Only saving grace here is that it is important for the economy.
This will be my last response to you & you’ve got the right to your opinion (not to your facts though).
Your arguments would have legs to stand on if they were backed by facts/proof.
Calling a company a fraud when evidence to the contrary is coming out isn’t a sign of an agile/flexible investor.
I on the other hand believe in bending my opinion on the basis of facts. I would have exited my investment at a loss had the divergence report come out as a negative again.
It was a key piece of information I was waiting for to make my decision and I’m happy, the bank has reported this “small mercy” sooner than later.
One more worry is the the nexus of Businessman, politician and executive…
Is RBI truly autonomous in current election times when an ex bureaucrat is heading it…
Reversal of many RBI policies including rate cut, nil divergence in Yes Bank…
What if Govt changes and governer too along with a change in view of RBI towards divergence in Yes Bank
These are the worst fears which can make you distrust the complete system
But investors need positivity to survive…so risk should be calibrated in order to let you survive in the game…
I am not sure why RBI is picking on Yes bank for making their divergence figure public. Other banks have done it too or intend to share it once they get it. Here are few eg:
I didn’t at all get the basis of RBI’s letter. If they were miffed with divergence reporting in public why they didn’t pulled up other banks.
To me it seems like RBI’s actions were questioned by analysts and they just vented their anger out on yes bank. By no means yes bank is clean but i find RBI’s letter being too harsh.
Who cares here if you are pkaying for a bounce or want to invest. You want to stay away, please stay away, nobody is forcing you. However this forum is to analyse fundamentals and posting a honest opinion to help other boarders and to add value to forum. Nothing wrong doen by yes bank by disclosing that divergance reported in nil. Why RBI did not issue notice to Axis, Indusind, HDFC bank for disclosing report. There are big questions on RBI governance, why RK was removed? What kind if survillence RBI follows which could not catch illegal LC used by Mehul/Nirav in case of PNB.
RBI had been churlish and silly. What they are essentially telling YB is do not share any regulatory issues with your shareholders. Let them go to hell. We will decide what is good for the Bank.
I wish some large shareholder takes RBI to court on this issue. They need to be rapped on the knuckles for such directives.
If there are other issues mentioned in the notice RBI should release it or ask YB to inform the shareholders. To cryptically admonish YB for selective leak is unbecoming of a central bank. Shareholders are owners and they have every right to know what is happening. If RBI can release divergence of other banks or of YB in earlier years, I wonder what are they scared of now.
I think they have detected knew concerns and are afraid of being called inept (for not detecting it in earlier years) and hence they want to keep it away from the press and the public.
I recall my conversation with the founder chairman of a large NBFC who refused a banking licence for he always felt RBI is/was the reason for lack of last mile banking reach to the millions. He also dropped a merger with a large institution for the stifling conditions laid by regulatory institutions.
To warn a large listed bank, for sharing a note from the central bank and threatening it with penalty is reprehensible.
I do not own Yes Bank but I think they are diligently purging the past sins.
Sumit, that ‘diversified fin. in private capacity’ is being run by his daughter if I am not wrong. RK prevented Madhu Kapur’s daughter in past from making it to YB board so he would have found it difficult to get his own daughter on YB board. Which may have been why he may have let/helped his daughter run a seperate co. by pledging YB shares.This is just a guess and a possibility. Emphasizing that what he did is ofcourse wrong imo but that decision may have zero bearing on YB’s prospects or asset quality. The bank said both cos. (YB and art) are at arm’s length but RBI may be well justified to remove RK from MD, CEO role for the said reason, if that’s indeed the reason for removal. Nonetheless, nil divergence (confirmed yesterday by RBI) should be seen as a big positive and people are seeing nothing much wrong in the bank revealing the news.
The confusion has been created by RBI by not being transparent. RBI’s audit report should be available with the citizens of India who have put it their saving in the banks . We are a democracy where the citizens are supreme. Let the citizens of this country take their own call based upon complete facts and not speculation about the contents of RBI’s report.
