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SBI Chief Says Yes Bank 'Won’t be Allowed to Fail', Sending its Stock Up 7.7%

SBI Chairman Rajnish Kumar’s statement comes at a time when markets are speculating that Yes Bank might be merged into SBI in order to avoid a banking disaster that can further cripple the Indian economy.

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Updated:January 23, 2020, 3:03 PM IST
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SBI Chief Says Yes Bank 'Won’t be Allowed to Fail', Sending its Stock Up 7.7%
File photo of SEBI.

New Delhi: Yes Bank Ltd shares surged as much as 7.7% in intra-day trade on Thursday after State Bank of India (SBI) chairman Rajnish Kumar made a statement saying that he believes that the bank private sector lender won’t be allowed to fail.

On the sidelines of the World Economic Forum 2020 in Davos, Switzerland, Rajnish Kumar told Bloomberg TV: “Yes Bank is a significant player in the market with an almost $40 billion balance sheet. I have a feeling that it will not be allowed to fail.”

Kumar added that, as a major player in the market, it would “not be good” for India’s economy if Yes Bank fails. “A bank that size, if it is allowed to fail, there’s a problem. I am sure that some solutions will emerge,” he stated.

Reacting to Kumar’s statement, shares of Yes Bank were trading at Rs 40.85, up by 6.2%, in afternoon trade after hitting the day’s high of Rs 41.40. The stock has, notably, lost over 80% of its value in the last one year as it struggles with asset quality concerns and capital-raising plans. The bank is in urgent need of funds in order to infuse capital to meet RBI’s prescribed capital ratios and stay afloat.

Kumar’s statement comes at a time when markets are speculating that Yes Bank might be merged into SBI in order to avoid a banking disaster that can further cripple the Indian economy. However, to recall, Rajnish Kumar had last month completely ruled out any chances of extending help to Yes Bank.

Meanwhile, Yes Bank had already scheduled an extraordinary general meeting of its shareholders on 7 February to discuss fundraising for Rs 10,000 crore and to authorise an expansion in its authorised capital to Rs 1,100 crore from Rs 800 crore earlier.

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