The government has approved a plan under which India’s largest lender State Bank of India (SBI) will be asked to buy a stake in cash-starved Yes Bank Ltd, according to a media report.
A Bloomberg report said that SBI has been authorized to form a consortium to complete the transaction. An announcement in this regard is expected soon, the report added citing people with knowledge of the matter.
Consequently, Yes Bank shares spiked as much as 27% to Rs 37.30 apiece in intra-day trade on Thursday, while those of SBI were down over 5% at the day’s low, though they recovered later to trade nearly 1% lower at Rs 283.
Interestingly, SBI chairman Rajnish Kumar had indicated in January this year that “some solutions will emerge” to steady Yes Bank, which has been on a prolonged quest to raise new capital.
“Yes Bank is a significant player in the market with an almost $40 billion balance sheet,” Rajnish Kumar had said in Davos. “I have a feeling that it will not be allowed to fail,” he had added.
Earlier this week, another media report had mentioned that the Reserve Bank of India (RBI) was preparing a rescue plan for the private lender if it fails to raise funds within the stipulated time.
Yes Bank on February 12 had announced that it would postpone the announcement of its December quarter results till around 14 March 2020 as the lender was in talks with potential investors for raising capital.
The bank said it had received non-binding expressions of interest from several investors, including J C Flowers and Tilden Park Capital Management, OHA (UK) LLP and Silver Point Capital.