ICICI Bank, HDFC, Kotak and other institutions have been sounded out for equity infusion while an array of public sector lenders have been approached for placing short-term deposits as part of a strategy to revive Yes Bank.
The plan is being finalised by State Bank of India (SBI).A proposed recapitalisation of close to Rs 20,000 crore with equity contribution from various institutions followed by bulk deposits (or, certificate of deposits) of around Rs 30,000 crore by multiple state-owned banks could pave the way for relaxing the moratorium on Yes Bank.
The move, SBI feels, would assuage concerns of deposits, prevent a flight of funds, and lead to an upgrade in credit rating, a person familiar with the proposal told ET.SBI senior officials are understood to have discussed the proposal over the past 24 hours.
The finance ministry, banking regulator as well as SBI, which is spearheading the revival plan, have indicated that the moratorium would be lifted as early as possible.
“If equity commitments are in place and CD funds flow in, the moratorium may be lifted by the end of the week,” said another person.
Sources said there is a distinct possibility that SBI would soon announce the plan.Yes Bank was placed under moratorium by RBI at 6pm on March 5. On the evening of March 6, RBI announced a draft reconstruction scheme — asking depositors and creditors to share their views on the plan by March 9.Meanwhile, on Wednesday morning, Axis Trustee, representing the investors holding additional Tier1 (AT1) bonds issued by Yes Bank approached RBI to propose a settlement plan.
“The majority bond holders of the AT1 bonds, for which Axis is acting as debenture trustee, have suggested that a minimum of 170 crore shares be allotted to the existing AT1 bondholders in proportion to their current holding of these bonds,” said a letter dated March 11 from Axis Trustee Services to RBI, Yes Bank and capital market regulator Sebi.
The proposal, thus, entails conversion of about Rs 8500 core AT1 bonds into Rs 1700 crore equity shares of Yes Bank – a haircut of around 80%. Since this would require splitting the 255 crore equity share pool of Yes between bondholders and shareholders, the latter would also have to accept a lower number of shares.
The government and RBI are yet to respond to the offer. The bondholders have also requested that the lock-in features, if any, should be restricted up to 36 months in line with the proposed new equity issuance by Yes Bank.
Axis has been continuously in touch with investors over the past few days,” said a senior banker.If the terms are accepted by RBI and SBI, majority of the AT1 bondholders have confirmed to Axis that they will not pursue the legal action which was initiated this week.
On Monday, Axis Trustee filed a writ petition before the Bombay High Court to restrain RBI and SBI from carrying out the `Yes Bank reconstruction plan’ before the views of bondholders are properly heard.
The petition was scheduled to be heard on Wednesday.
Original Source: economictimes.indiatimes.com
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