YES Bank stocks tank over credibility issues

The shares of the embattled private sector lender YES Bank have tanked by 38% in the past 10 trading sessions after the bank announced a proposed $2 billion bailout package by a gamut of investors.

The beating that the bank’s shares have been receiving is primarily on the back of credibility issues that the bank has been facing with investors. Many of the analysts on Dalal Street say that the bank’s recent statements on the proposed fundraising have been “more of talk and less of work”.

During the intra-day trade on Wednesday, the bank’s scrips traded at as low as Rs 40.7 apiece, down by 19.5%, as Bank’s shares witnessed massive selling. However, in the last hour of the trade, the bank’s scrips stabilised a bit, closing 15.33% down at Rs 42.8 apiece.

This loss in the share prices comes on the 10.1% beating that the bank’s stock received on Wednesday -- when it had closed on Rs 50.55 apiece.

“This seems clearly more of talk and less of work by the bank. They have been unable to come up with anything concrete,” said the CEO of one of the fund-houses that YES Bank had approached for the bail-out, wishing anonymity.

While the bank in its November 29 board meeting had said that it will “finalise and approve the details of the preferential allotment” on December 10, yet nothing concrete came, even after six hours of the board meeting. In the November 29 meeting, the board had announced the names of the investors as well, including the mysterious Canadian businessman Erwin Singh Braich, which made investors jittery.

According to various analysts, the bank is in the immediate need of $1-$1.5 billion worth of capital infusion. The bank has been plagued with stressed assets and rising contingent liabilities along with a dip in the CASA ratio. Even though the CASA ratio of the Bank improved by 60 basis points (bps) in the September quarter, but the absolute CASA has declined by 5.3% in three months to Rs 64,496.4 crore.

Meanwhile, after rating agency, Moody’s downgraded the bank rating on credit and deposits, many other brokerages have come out with critical reports on the bank.

“Risk to capital raising is a risk to both our estimates of book value and multiples as unavailability of capital raises question ongoing concern status of the bank,” said Nomura Research in a December 11 research note.

The bank hasn’t responded to the queries put across by DH.

Meanwhile, according to a news report in The Hindu BusinessLine, ace investor Rakesh Jhunjhunwala is set to withdraw his offer for the YES Bank.