YES Bank gains nearly 5% after approval for sale of Rs 48,000 cr stressed loans to JC Flowers ARC

Shares of Yes Bank climbed nearly 5 percent in intraday trade after the private sector lender announced that its board has approved the sale of stressed assets worth around Rs 48,000 crore to JC Flowers ARC. JC Flowers was the only bidder for the lender's portfolio.

At 10:49 am shares of Yes Bank were trading at Rs 17, up by 3.7 percent from the previous close on the BSE.

“The Swiss Challenge process has now concluded and the Bank not having received any Challenger Bids to the Base Bid, the Board of Directors of the Bank, at their Meeting held on September 20, 2022, has approved the declaration of JC Flowers ARC as the winner of the Swiss Challenge process,” the lender said in a BSE filing.

JC Flowers had initially bid Rs 11,183 crore for the NPA. As the Swiss Challenge process (used to invite challenger bids for the sale of assets)concluded, The bank's board of directors today approved the declaration of JC Flowers ARC as the highest bidder for the stressed assets.

Soon after the Reserve Bank of India rejected Yes Bank's plan to set up an ARC as a subsidiary in March 2021, the bank invited bids for its bad assets portfolio. The private sector lender had conducted a Swiss challenge in order to invite challenger bids in compliance with RBI guidelines on transparent bidding.

According to the binding term sheet between JCF ARC LLC, JC Flowers and the bank for the portfolio sale, the board members approved the bank's investment for the acquisition of up to 19.99 percent equity stake in JC Flowers ARC. The purchase can be made in single or multiple tranches, subject to regulatory approval."The bank will now proceed towards negotiating definitive agreements," Yes Bank added in a regulatory filing.

For the April-June quarter, Yes Bank reported an improvement in its asset quality, the value of gross non-performing assets (GNPAs) fell to 13.45 percent as compared to 15.60 percent in the corresponding period a year ago.

Yes Bank reported a 50.17 percent rise in profit after tax (PAT) at Rs 310.63 in the April-June quarter compared to the number standing at Rs 206.84 crore in the corresponding period a year ago. Net interest income (NII) for the quarter jumped 32 percent to Rs 1,850 crore and the Net Interest Margin (NIM) for the quarter came in at 2.4 percent, up nearly 30 basis points from the corresponding period a year ago.