YES Bank shares tank below the IPO price

 A security guard stands outside a Yes Bank branch at its headquarters in Mumbai. (Reuters Photo)

The shares of embattled private sector lender YES Bank tanked below the issue price on Tuesday. In the last two days, the bank has seen its share price decline by 40%.

The bank's scrip tanked 22.8% on Tuesday to close at Rs 32 apiece over fears of stressed exposure. The bank had issued its shares way back in June 2005 in the price band of Rs 38 to Rs 45. However, the bank, in 2017, had split the stock in the ratio of 1:5.

In a filing to the stock exchanges, the bank said it had no idea why its share price was tanking. "We would like to submit that the Bank is not aware of any information that led to the movement in the share price of the scrip," the bank said in a clarification to BSE.

However, the market analysts suggest that the investors have been worried about the stressed exposure of the bank in various companies that have been defaulting in the recent past.

"There are lot of issues in the books of the bank. Its advances are very risky. Plus the governance issues haven't completely allayed," an analyst said.

According to a report by brokerage firm Jefferies, YES Bank had an exposure of Rs 3,700 crore to DHFL — which has also defaulted on its loans.

YES Bank, which had exposure to HDIL too, had sold a part of its loan to Suraksha Asset Reconstruction Company, owned by Sudhir Valia, a co-promoter of Sun Pharmaceutical Industries.

However, in a statement on Monday, the bank's CEO and MD Ravneet Gill, said that the bank was safe. "While this has impacted the share price adversely, the Bank would like to state that its capital and liquidity position are comfortably above the regulatory threshold and the asset quality is in line with the guidance provided post-Q1 FY20 results. The Bank’s outstanding exposure to the Housing Finance / Real Estate conglomerate, which is in the news today, is totally secured and over the last six months there has been a reduction of approximately 30% in this exposure," he said without elaborating on the exposure.

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