BENGALURU: Shares of Yes Bank Ltd surged nearly 30% on Thursday after it was reported that a group led by top lender State Bank of India (SBI) will inject capital into the troubled private-sector bank.
SBI has been authorised to pick other members of the consortium in the plan approved by the government, the report said citing people with knowledge of the matter.
An announcement is expected soon, according to the report.
Shares of SBI fell as much as 5.4% on the report, before reversing course to trade and finish 1.05% higher in a firm Mumbai stock market.
Yes Bank in a filing with the stock exchanges said it was not aware of any such decision, while SBI said here it would abide by timelines for disclosures. After rising around 30% in intra-day trade, Yes Bank shares settled 25.77% on the BSE index.
Finance ministry did not immediately respond to a Reuters request for comment.
“The cost of not bailing out Yes Bank for the economy and banking system is far higher than bailing out and hence under the current circumstances this looks to be the only option as investor interest in the stock is very low,” Macquarie Research said in a note.
Yes Bank has struggled to raise capital it desperately needs to stay above regulatory requirements as it battles high levels of bad loans due to its exposure to troubled sectors.
India’s fifth-largest private sector lender has been trying to raise $2 billion in fresh capital since late last year, and in February delayed its December-quarter results due to the plans.
“The more the delay in capital raising, more is the systemic risk engendered by Yes Bank’s failure,” Macquarie said.
In January, the bank said it had rejected a $1.2 billion investment offer from Canadian investor Erwin Singh Braich and Hong Kong-based SPGP Holdings - an offer about which many analysts had expressed doubt.
Shares of larger private-sector rival Kotak Mahindra Bank Ltd jumped 4.3% after the report, pushing the blue-chip NSE Nifty 50 Index up as much as 1.2%.
Macquarie said the stock was being supported by expectations that the report removes the overhang that Kotak will buy Yes Bank.
SBI has been authorised to pick other members of the consortium in the plan approved by the government, the report said citing people with knowledge of the matter.
An announcement is expected soon, according to the report.
Shares of SBI fell as much as 5.4% on the report, before reversing course to trade and finish 1.05% higher in a firm Mumbai stock market.
Yes Bank in a filing with the stock exchanges said it was not aware of any such decision, while SBI said here it would abide by timelines for disclosures. After rising around 30% in intra-day trade, Yes Bank shares settled 25.77% on the BSE index.
Finance ministry did not immediately respond to a Reuters request for comment.
“The cost of not bailing out Yes Bank for the economy and banking system is far higher than bailing out and hence under the current circumstances this looks to be the only option as investor interest in the stock is very low,” Macquarie Research said in a note.
Yes Bank has struggled to raise capital it desperately needs to stay above regulatory requirements as it battles high levels of bad loans due to its exposure to troubled sectors.
India’s fifth-largest private sector lender has been trying to raise $2 billion in fresh capital since late last year, and in February delayed its December-quarter results due to the plans.
“The more the delay in capital raising, more is the systemic risk engendered by Yes Bank’s failure,” Macquarie said.
In January, the bank said it had rejected a $1.2 billion investment offer from Canadian investor Erwin Singh Braich and Hong Kong-based SPGP Holdings - an offer about which many analysts had expressed doubt.
Shares of larger private-sector rival Kotak Mahindra Bank Ltd jumped 4.3% after the report, pushing the blue-chip NSE Nifty 50 Index up as much as 1.2%.
Macquarie said the stock was being supported by expectations that the report removes the overhang that Kotak will buy Yes Bank.
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