HYDERABAD: SBI on Saturday confirmed that it will pick up a 49 per cent stake in Yes Bank with an initial commitment of Rs 2,450 crore.
The bank's legal and investment teams are working overnight doing due diligence and will respond by Monday, the time given by RBI to the lender. SBI will also try to get the resolution plan approved and implemented much before the set deadline of April 3.
While SBI will pick up stake at the RBI-determined Rs 2 per share, for incoming investors the usual norm of SEBI-guided pricing formula will kick in.
Speaking to the media, chairman Rajnish Kumar said that there were as many as 23 potential investors interested in picking up a stake in Yes Bank and the SBI board will decide if it should invest alone or co-invest with others.
"We have to hold 26 per cent as per the three-year lock-in. But depending on the scenario, if I find co-investors, who are acceptable to RBI, we might consider that," Kumar said.
These include some foreign and domestic institutional investors who have to qualify with the banking regulations' proper criteria. "That call will be taken by the RBI," Kumar clarified.
He added that Yes Bank's revised market capitalization of Rs 2,500 crore doesn't look over-priced by any definition and so SBI's proposed investment of Rs 2,450 crore, prima facie, was a reasonable bet even for SBI's shareholders including minority investors. "We are mindful of the interest of minority investors in SBI and all actions are governed and their interest will be protected," he said.
According to Kumar, SBI has not lost money in any investment made so far. Be it in SBI Cards, SBI Mutual Funds, or others, the bank ensured that its joint venture partners and subsidiaries don't get disappointed. As for Yes Bank's 'forced investment call'. Kumar said, "There were not many options before RBI and government, which is why they had to go with this proposal."
Getting SBI on board was essentially to prop up investor confidence and perhaps the banking regulator hopes potential investors will value Yes Bank fairly. As per the plan, SBI board will nominate an MD & CEO and two nominee directors on Yes Bank board and when the RBI-appointed administrator vacates, the newly-appointed board will steer the decisions.
"We have stepped in to give assurance to potential investors and depositors. There's a certain process that needs to be followed when a bank is being reconstructed," Kumar said stressing that SBI isn't merging Yes Bank with itself.
Given SBI's size and rate of internal accruals, he believes the proposed investment will neither dent the bank's capital ratios nor will it knock on the government's doors asking for capital. "Our board mandate is that we maintain 0.5 per cent above regulatory minimum capital adequacy. We will continue to do that," Kumar said.
He assured depositors that though there might be some inconvenience, their money was safe.