YES Bank has filed its prospectus with the Registrar of Companies (RoC) to raise up to Rs 15,000 crore by launching a follow-on offer. The offer price band is likely to be in the Rs 12-15 price band, and could be launched as early as next week, said banking sources.
The issue has been filed under the fast track issues norms, where companies meeting certain criteria can proceed with the issue by filing a copy of the prospectus with RoC or letter of offer with stock exchanges and Securities and Exchange Board of India.
The bank restated its financials for the last three years before the filing was made to the RoC. The bank has reported net loss of Rs 16,418 crore in fiscal year ending March 2020. In the last six months, there has been a significant decline in its deposit base and a sharp rise in the non-performing assets as a new management led by former State Bank of India official Prashant Kumar is trying to resurrect the bank.
The bank’s deposit base was down 54 per cent year-on-year (YoY) in FY20 to Rs 1.05 trillion while total assets were down 32.3 per cent YoY last fiscal. In comparison interest earning assets – advances and investment were down 29 per cent and 51 per cent YoY respectively last fiscal.
In March this year, the government of India had notified the YES Bank Ltd Reconstruction Scheme and reconstituted the entire board of the bank. It received capital of Rs 10,000 crore from several other banks including State Bank of India as part of the plan. These banks invested in the capital of the bank at the rate of Rs 10 a share (Rs 2 face value and Rs 8 premium).
But this capital is not enough and the bank is now going for second round of capital raising exercise.
The bank made additional provisions for the period ending December 2019 of Rs 15,422 crore as several of its corporate clients defaulted on loans.
In its restated account the key change over the previous account has been in profit and loss accounts for the last three years while there is no change in assets or liabilities for the period. For example, provisions for bad loan more than doubled in FY18 from Rs 1,554 crore reported earlier to Rs 3,526 crore in restated accounts.
The bank also made additional provisions of Rs 640 crore for year ending March 2019. However, provisions for bad loans in FY20 were lowered by Rs 4,405 crore in the restated books from Rs 32,718 crore to Rs 28,312 crore.
On the revenue side, there is an upward revision in fee and other income to tune of Rs 2,118 crore in FY20 or around 6 per cent compared to the original account.
However, there is no change in the profit or loss figures which remain the same as earlier.
This keeps the bank’s valuation ratios such as price to earnings multiple and price to book value unchanged.