Kumar said in an interview in his office that one of the overhangs of the bank is the fate of the Bank of India (SBI) shares, which has been taken care of.
Moody’s investor services have a long-term rating of BA3 and have a positive outlook for banks.
The Reserve Bank of India (RBI) replaced the board in March 2020 after Yes Bank’s financial situation deteriorated. Soon after, a group of banks led by SBI rescued Yes Bank. Now, with an agreement with SMBC, Japanese lenders will acquire 20% stake ₹134.82 million will allow some exports of SBI and others. Kumar expects all approvals to be obtained in September.
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Meanwhile, Kumar said the second target of the deal is SBI shares, although partly replaced by strategic investors, Japan’s second largest banking group and the 15th largest banking group in the world. “(It’s a highly respected group and always has a long-term view on investment anywhere in the world,” Kumar said.
The ultimate goal, he said, is focusing on how the deal can alleviate past concerns raised by rating agencies. Kumar said rating agencies expressed concern about what would happen to SBI’s stake in banks.
Rating agency inquiry
Rating agencies also questioned the bank’s management trajectory, which Kumar said was the lender’s financial answer. Another question for rating agencies is whether existing shareholder banks can inject more if they want to raise funds.
“I think the possibility of raising a bank is definitely there. That’s what we believe,” Kumar said, who was appointed in March 2020 and was re-appointed for three years in October 2022.
March 2024, Mint According to reports, yes, banks are looking for new sponsors.
For large stocks like Yes Bank, these options are based solely on mergers and acquisitions with domestic banks (mergers and acquisitions) or bringing strategic investors to the bank, Kumar said on Monday.
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“So we started this exploratory journey by finding ways out for banks to exit.
Another option might be private equity (PE) investors, he said, but PE always has a short-term goal, and Yes Bank is looking for long-term strategic investors.
“Maybe in 2022, when we get money from PES, there is more in terms of survival capital.” In December 2022, the Reserve Bank of India has provided conditional approvals to the Private Equity Investor Group and Advent International, with 9.99% approvals each of the private lenders are banks.
Merger and Acquisition Transactions
Kumar said a merger agreement with domestic banks would mean meeting the aspirations of both entities. He said that all mergers and acquisitions, large and small, have their own pain points in terms of human resources integration and technology integration, usually taking two and three years.
“Some investors showed interest, we reached non-binding deals. Then there was due diligence, and these investors had some expectations for these investors, some of them did not meet regulatory guidelines,” he said.
Mint The May 9 report said that over time, SMBC will hope to increase its stake in Yes Bank, ultimately triggering an open offer for additional stocks. However, SMBC’s voting rights will be limited to 26% under the RBI regulations.
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Analysts are skeptical about how SMBC’s deal will be.
“We are not sure if SMBC can further increase its stake by buying later or through subsequent equity infusions,” analysts at Kotak Institutional Equities said in a May 12 note.
The statement says that the transaction will not change the bank’s business perception, but will eliminate buyer uncertainty. “Although we acknowledge that the transaction is higher than our fair value, we are forced to look at the deal from a minority shareholder perspective, and more options to invest in the market,” it said.
That is, the bank has already discussed in advance any inorganic opportunities before the transaction is completed. Kumar told in June 2023 BusinessLine Yes, banks have begun due diligence on some non-bank financial companies in the Microfinance Field (NBFC-MFIS).
