While the issues you’ve highlighted are definitely real and there is no point in denying that compliance culture/corporate governance is weak at the bank, my thinking is on 2 points:
- Whether the issues are resolvable.
- Can Yes Bank as an institution survive this crisis.
And in my opinion, the answer to these questions is “Yes” - with fresh leadership and new capital raise. Now obviously it’s not an easy task and will take determined+honest efforts on the part of new leadership to achieve.
Purely from a rebound perspective - ICICI Bank touched 260/- at the trough from where it rebounded to 350 today once some light was visible at the end of “legacy issues” tunnel. Axis Bank touched a low of 480/- again at a time when everything was going wrong for the bank. Now it’s at 600+.
Just to take a cue from the start up arena - just this morning I was reading about Palantir Tech which has a $20B valuation but it’s entire top mgmt still practices the old scrappy/hippie ways (attending offices in shorts ,behaving untidily in meetings, being spendthrift for eg.). These problems are making it hard for it to become profitable and evolve as an established player in the tech arena and are delaying it’s IPO as well. Several old investors are looking for exits.
But these problems are resolvable and their CEO is determined to become profitable, by cutting down on spurious expenses/lavish parties/offices and change the image of the company from “hippie” to “sophisticated”. (https://www.wsj.com/articles/palantir-has-a-20-billion-valuation-and-a-pretty-big-problem-it-keeps-losing-money-1542042135)
Similarly Yes Bank’s new leadership will need to change its image of poor compliance/corporate governance if it has to evolve as a large lender, from a mid sized one, as envisioned by it for 2025.
Can the new leadership do that? Yes.
But will they? Only time can answer. I’m willing to give it time coz the price is too attractive to ignore.
Disc. : Views are biased.