KOCHI: Federal Bank has become the latest bank to make an equity commitment to the embattled Yes Bank as the Kerala’s largest bank has issued statement offering to invest Rs300 crore to subscribe 30 crore shares of the troubled bank at a price of Rs10 per share.
Yes Bank shares closed on Friday at Rs25.45 and Rs25.55 on NSE and BSE respectively – trading at about one-tenth of the price a year ago.
“This equity commitment is pursuant to the scheme of reconstruction of Yes Bank proposed by the Reserve Bank of India (RBI) subject to regulatory approvals and other conditions as set out in the letter,” said the Federal Bank letter.
Federal Bank has thus become the sixth bank to throw its hat in the ring after SBI, ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra have already made their equity commitment in the capital-starved Yes Bank, which once had been looked upon with envy by other banks for its profitability and the fast growth the now-fallen bank used to flaunt.
Following the announcement of Yes Bank’s reconstruction plan, SBI committed to invest Rs7,250 crore at Rs10 per share for up to 49 per cent stake.
This triggered equity commitments totalling Rs3,100 crore from four private lenders with HDFC Ltd and ICICI Bank offering to pick up 5 per cent stake at Rs1,000 crore each, whereas Axis bank said it would put in Rs 600 crore and Kotak Mahindra Bank Rs 500 crore to buy equity stake in Yes Bank.
As per the arrangement, SBI cannot reduce its holding below 26 per cent for the next three years, whereas the other investors will be subject to a three-year lock-in period for 75 per cent of their investment.
According to the scheme, the total share capital has been increased to Rs6,200 crore from Rs1,100 crore earlier, to “accommodate immediate and also subsequent raising of capital requirements” finance minister Nirmala Sitharaman had said