The State Bank of India (SBI) on Saturday announced it will pick up a 49 per cent stake in Yes Bank for Rs 2,450 crore and clarified that all the deposits and liabilities of the reconstructed bank will continue in the “same manner”.
Thecrisis-hit Yes Bank, which failed to garner investor support in raisingcapital, was on Thursday superseded by a Reserve Bank appointed administrator,in consultation with the central government, and customers have been restrictedwith a withdrawal cap of Rs 50,000 only till April 3.
“YesBank has 255-crore shares of Rs 2 per share. SBI will be issued 245 croreshares at a price of Rs 10 per share for Rs 2,450 crore. This will be 49 percent of the share capital of the reconstructed bank,” the State Bank saidin a statement.
“SBIshall not reduce its holding below 26 per cent before completion of three yearsfrom the date of infusion of the capital,” it added.
TheSBI also said that a board of directors will be constituted at thereconstructed Yes Bank comprising chief executive and managing director,non-executive chairman and non-executive directors.
“SBI shall havenominee directors appointed on the board of the reconstructed bank. RBI mayappoint additional directors to the board. The members of the board soappointed shall continue in office for a period of one year, or until analternate board is constituted by Yes Bank Ltd,” the statement said.
The RBI has appointedPrashant Kumar, former deputy managing director and chief financial officer ofSBl, as an administrator of Yes bank.
Earlier, the Reserve Bankhad released the draft of Scheme of Reconstruction of Yes Bank and invitedsuggestions and comments up to Monday, March 9, 2020.
It said that all theemployees of the reconstructed Yes Bank shall continue in their servicewith the same remuneration and on thesame terms and conditions of service, at least for a period of one year.
“Theboard of directors of the reconstructed bank will, however, have the freedom todiscontinue the services of the key managerial personnel (KMPs) at any point oftime after following the due procedure,” the SBI statement noted.
Allthe deposits with and liabilities of the reconstructed bank will continue inthe same manner, the country’s largest lender said, adding, the instrumentsqualifying as additional tier-1 capital shall stand “written downpermanently, in full”.
Also,the offices and branches will continue to function in the same manner and thebank reconstructed bank would be allowed to open new offices and branches orclose down existing offices or branches, the SBI said.
“Rightsand liabilities of the reconstructed bank all contracts, deeds, bonds,agreements, powers of attorney, grants of legal representation and otherinstruments of whatever nature shall be effective to the extent and in the samemanner, as was applicable before the scheme,” it added.
Earlierin the day in Mumbai, SBI Chairman Rajnish Kumar said that it had set a maximuminvestment limit of Rs 10,000 crore for Yes Bank reconstruction process.”I have already set the (investment) boundary of Rs 10,000 crore,”Kumar told reporters in Mumbai. The cap of Rs 10,000 crore is based on theassumption of higher capital requirement by the bank, he added.
Yes Bank has beenstruggling to raise capital amidst its dwindling financial health. It sought toraise USD 2 billion initially during this fiscal, which was then pruned to USD1.2 billion as it could not rope in any investor.
The SBI chief also said that the once it will complete its due diligence, it will go back to the RBI with bank’s comments.