The investment can be increased to Rs 10,000 crore in the next three years during which it will have to a maintain 26 percent stake in Yes Bank.
State Bank of India (SBI) share price fell 6 percent intraday on March 9 after the company said it is going to infuse capital to rescue the private lender Yes Bank.
SBI is allowed to buy up to 49 percent stake in Yes Bank along with an initial investment of upto Rs 2,450 crore.
The investment can be increased to Rs 10,000 crore in the next three years during which it will have to a maintain 26 percent stake in Yes Bank.
Also Read- SBI may rescue Yes Bank, but the stock is now a trader's play: Experts
Chalasani Venkat Nageswar, Deputy Managing Director, lnternational Banking Group has been given additional charge of Deputy Managing Director & CFO with immediate effect till further orders.
Also read: Yes Bank share price jumps 30% as SBI is likely to pick up 49% stake
Credit Suisse | Rating: Outperform | Target: cut to Rs 330 from Rs 400 per share
The infusion in Yes Bank is well short of $4 billion recapitalisations the bank needs.
Delay in eventual resolution will impact Yes Bank’s deposit franchise. However, the reconstruction is unlikely even with SBI holding a large minority stake.
Credit Suisse expects the merger to be the eventual outcome & suspend coverage of Yes Bank and believes a full merger to be less adverse to SBI.
The merger overhang & call for national service will keep SBI multiple under pressure, it added.
Investec | Rating: Buy | Target: Rs 380 per share
According to Investec, the Yes Bank draft reconstitution scheme is better than a full merger and the key variable for the company is ensuring Yes Bank remains a ‘going concern’.
Corporate/Quasi-PSU companies should feel comfortable to park liquidity with Yes Bank.
Impact of Rs 10,000 crore on BVPS in FY20 & FY21 shall be 4 percent & impact on CET1 is at 40 bps and not material for company in the context of over Rs 50,000 crore annual slippages. However, it does highlight the ‘principal agent’ issue for the bank.
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