All fall down! Yes Bank slumps after RBI supersedes board, caps withdrawal limits

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All fall down! Yes Bank slumps after RBI supersedes board, caps withdrawal limits

Bank witnessed a massive beating in today’s trade and it has plunged more than 73% in the morning trade, however, it has recovered after hitting a record low of Rs5.65/share on the NSE.

The shares plunged 25% in the opening trade after the bank was placed under a moratorium.

Reacting to this news, the Private and public banking stocks fell crashing in the opening trade.

RBI supersedes board, caps withdrawal limits: Yes Bank was placed under a moratorium, with the Reserve Bank of India (RBI) capping depositor withdrawals at Rs50,000 per account for a month and superseding the board with immediate effect, RBI said on Thursday evening.

The RBI came to the conclusion that in the absence of a credible revival plan, and public interest and the interest of the banks depositors, it had no alternative but to apply to the central government for imposing a moratorium under section 45 of the Banking Regulation Act, 1949. Accordingly, the Central Government has imposed moratorium effective from today, RBI said in a statement.

“The financial position of Yes Bank Ltd. (the bank) has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits,” RBI said on Thursday evening. The bank has also experienced serious governance issues and practices in recent years which have led to a steady decline of the bank.

No Future and Options contracts: National Stock Exchange (NSE) in its circular said that no Future and Options contracts shall be available in the Yes Bank for trading in the equity derivative segment from May 29, 2020, onwards.  The existing Future and Options contracts, across all expiries, shall expire on May 28, 2020.

SBI, ex-DMD and CFO takes over as Administrator of Yes Bank: The board of Yes Bank has also been superseded with immediate effect, RBI said in a late evening statement. It also appointed former chief financial officer (CFO) of SBI, Prashant Kumar as the administrator of Yes Bank.

Yes Bank responds to exchanges on news reports of SBI buying stake in the bank: Yes Bank clarified on Thursday’s afternoon said that it has not received any communication from the Reserve Bank of India (RBI) or any other government or regulatory authorities or from SBI and hence the bank is unaware of any such decision. The bank further said it is in its usual course of business to explore various means of raising capital/ funds through issuance of securities to diverse set of investors to meet its business/ regulatory requirements.

Separately, SBI clarified today that it abides by the timelines under regulation of disclosing the developments, if any in the matter to stock exchanges.

Brokerage house views: According to the media reports, JPMorgan said in a report, “We believe forced bailout investors will likely want the bank to be acquired at near zero value to account for risks associated with the stress book and likely loss of deposits.” The firm has cut its price target on the lender to Rs1 from Rs55 a share.

Moody's Investors Service said in the note that the Reserve Bank on India's moratorium and withdrawal cap on Yes Bank is credit negative, and the lack of coordinated action highlights continued uncertainty around bank resolutions.

RBI governor Shaktikanta Das on Yes Bank: With an objective to revive the beleaguered Yes Bank, the RBI will come out with a scheme very shortly, RBI governor Yes Bank depositors’ interest will be fully protected, RBI Governor Shaktikanta Das said in the media reports.

No longer on Nifty50 from March 27: Further, from March 27, 2020, the bank will no longer be a part of the Nifty50 basket of shares. The private sector lender will exit the benchmark index and will be replaced by Shree Cement, according to a statement by the bourse.

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