I bank with Yes to a significant extent as a retail client. A large % of my family’s savings (fixed deposits of around 20 lakhs) is currently with them.
As I do not understand the intricacies of banking as a sector too well, I’ve never personally analysed/purchased any bank stock. Hence, with the current rout in the market cap, do you anticipate a “run” on the bank by depositors anytime soon?
This might seem like a noob question but considering the trash portfolio Yes seems to be holding, I’m quite terrified.
These deposits are unsecured and insured only upto 1 lakh.
While our look into the recent past may give us the feeling that depositors will not be let down, there have been many failures in the past. The most prominent one in independent India is Palai Central Bank 60 years ago. Co-operative banks fail and there is no protection.
A friend wrote this piece that brings to light bank failures in India.
So there is a non-zero chance of failure and if it is making you uneasy, then the pain of shifting to another safer bank may be well advised.
At the risk of making myself unpopular in this forum, I should also add that asking bank shareholders whether its bank deposits are safe, is to a certain degree conflicted.
I also have account with yes bank. Few days back went to bank and everything looks fine. Manager tried selling Insurance Policy. He was not bothered with FD or funds in savings bank. So, I feel they are not that desperate for funds.
The fall is nothing to do with CG power. Everyone knows its NPA along with COX and Kings and Vadora cements. After COX and Kings, there is not even 1 account where pledge was invoked.
While the regulator may decide to play Ostrich, would request investors on the forum to apply their rationale sense and restrict FD to 1 lakh. Any more money in a bank which has lost 85% value in 1 year is being blind to reality if not downright foolish. Are you being tempted by the additional 1% they are offering? Better be safe than sorry. A run on a bank can be pretty unnerving. While the regulator may not allow a complete loss for depositors and would prefer a merger with a strong bank, you may have to like with that uncertainty if thing collapse from hereon. In all likelihood, such events call for a freeze on withdrawals, restricted withdrawal for senior citizens and (god forbid), haircuts. Act before it is too late.
I too interact with yes Bak folks on regular basis specially their IT staff and visit their HQ at least twice a week . everything looks normal based on my interactions infact they invested significant amounts in revamping their technology setup the spend must be few hundred crores so they are investing and planning / getting ready for future that’s for sure.
There are internal rumors that Mr Gill is trying to replace staff at key position that was hired /placed by RK .
So I think things should be ok after sometime assuming the NPA don’t erode their entire equity base.
Good luck guys, let us see how things unfold from here on.
It’s one of the largest holding for me and significant notional loss currently.
Looks like DHFL is not turning into that bad settlement even though chances of immediate payment is not made.(The headline is just eye catching and full article needs to be read)
Yes is not listed among the lenders to DHFL. I believe Yes is an investor in DHFL bonds and the value(MTM) has gone down now which was shown as loss in Q1. At some point DHFL has to return the money to bond investors to improve their credit ratings atleast
As mentioned inside, bank is not supposed to share granular info about their clients when fund raising in openly doing then how come PE investors are expecting same ??
Bank got still got some time to consider others but considering the market it may act as a immediate negative aspect and can drag the price still further down ??
Experts views please…
Disc: Significant part of my PF.
Notice is hereby given that a meeting of the Board of Directors of YES Bank Limited (‘the Bank’)
will be held on Friday, August 30, 2019 at Mumbai, inter alia, to consider and approve raising of
funds by way of issuance of equity shares including but not limited through preferential issue
and/ or Qualified Institutions Placement (QIP)/ Global Depository Receipts (GDRs)/ American
Depository Receipts (ADRs)/ Foreign Currency Convertible Bonds (FCCBs)/ fully or partially
convertible debentures/ convertible Preference shares/ any other financial instruments or
securities convertible into Equity Shares or any other instrument on private placement basis,
subject to regulatory approvals, as may be required.
Not many options available as they might run out of money to provision for growing NPA’s. By going for fund raising again at lower valuation, they might even get a new promoter and confidence in the bank might grow. With out raising capital they can’t grow. So fund raising is the need of the hour to restore confidence and start transition towards becoming a much better bank than it was before under RANA’s leadership.
Moody’s expects the bulk of YES Bank’s operating profits to get consumed by loan loss provisions over the next 12-18 months, and thus not support internal capital generation.
To all members, what it means for the investors? Your valuable views are welcome. Thanks
I think they have others options which will not dilute at this price like convertable bonds,foreign currency convertible bonds etc. This way dilutions happens but not a current price. I am also newbie. Just my 2 cents.
Ravneet Gill has already missed a trick by not raising more in QIP. The QIP was oversubscribed 3 times and he should have retained all that money. Nobody knows for how long the tight liquidity conditions will exist. Worrying about dilution is not important right now. In an earlier post I assumed the true book value of YB to be 60 Rs in worst case. Even if they raise say 7500 Cr. at 60Rs, I personally don’t mind that. The (my estimated) BV does not drop that way. Yes the EPS will reduce to two-thirds that way but ultimately market will give you a PB multiple based upon growth. At least YB will have ammunition (read capital) to grow. In current situation, hoping to raise money at higher valuations is seeming like a typical retail investor behaviour and all this uncertainty is allowing shorters a free run to hammer the stock down on every pretext.
I meant they need to raise money via all options available including all types of bonds suggested. With the current situation of Yes and it’s credit rating, I am not sure if Bonds of all types is the way to go and interest rates would be linked to ratings I believe with which the interest payments will also be higher. With PE no payment Obligation for the Bank, PE gets to own the Bank and also control it if the holdings share is higher.
I know the approval was for 10% but he could have asked for an option to retain more. Its a very standard practise with QIP raise. That’s why I am saying he missed a trick. Now he will end up causing even more dilution and adding to uncertainty.
