MUMBAI: The series of top exits at Yes Bank, and corporate governance issues have led to Moody’s downgrading the bank’s foreign currency issuer ratings by two notches and a change in outlook to Negative. Moody’s downgraded the bank’s foreign and local currency bank deposits ratings to Ba1/NP from Baa3/Prime-3, and baseline credit assessment (BCA) to ba2 from ba1. However, Moody’s reaffirmed the bank’s counterparty risk assessment (CR assessment) of Baa3/p-3.
The outlook, it said, has been changed to negative from stable.
“The rating action considers the resignation of various members of the bank’s Board of Directors — which, when seen in conjunction with the Reserve Bank of India’s (RBI) directive in September, 2018 to restrict the term of the bank’s MD&CEO as well as founder, Rana Kapoor, till 31 January, 2019 — have raised Moody’s concerns over corporate governance,” Moody’s said.
Though the bank’s “reported credit fundamentals remain stable, the developments surrounding the transition in leadership as well as the governance issues are credit negative because they complicate management’s effective implementation of the bank’s long-term strategy,” Moody’s said. This it feels could “constrain” the bank’s ability to raise new capital.