As the exit of Rana Kapoor, MD and CEO of Yes Bank, nears amid the rise of allegations of compliance and corporate governance failures in the bank, Rajat Monga, senior group president of Yes Bank, said there is no pressure on Kapoor to reduce his stake in the bank.
"There should not be any pressure on him to sell down his stake. We believe him when he says that he will stay put on his holding. He also will know that these are times where there is deep value in the valuation – the share has corrected quite a bit. These are opportunities for us to sustain through these times and focus on the bank’s fundamentals and this change that we are going through is only for a matter of weeks. There are line-ups of board meetings, outcomes which should be able to set the bank back to the path which it was always following," Monga said in an interview with CNBC-TV18.
Kapoor is stepping down from his position on January 31, 2018. At the end of June 2018, Rana Kapoor held a stake of 4.34 percent.
Monga said that the bank is looking to appoint a chairperson and is still in search of a new CEO, adding that the issue of raising capital in the bank should be taken up after the new CEO is appointed. Monga also dismissed news reports which claimed that Kapoor is eyeing to be the non-executive chairman of the bank and said it has been taken out of context.
"If you go back 15 years, late Mr Ashok Kapoor was the bank’s non-executive chairperson when the bank started. The articles, therefore, provided for those position at that point in time. However, the current regulatory framework is very different. You will notice that with the most private sector banks that the only person who can be a bank’s chairperson is someone who is independent and naturally someone who is of imminence," he said.
Monga also clarified on the recent downgrading by rating agencies and said that the Reserve Bank of India (RBI) has access to all the information.
The rating agencies cited board resignations and concerns over corporate governance in the bank as the reason for the downgrade. ICRA said Yes Bank's ratings remain on watch with negative implications, while CARE said ratings remain on credit watch with developing implications.
Earlier this week, rating agency Moody's also downgraded the bank's foreign currency issuer rating and changed its outlook on the bank to 'negative' from 'stable'.
"Business fundamentals of the bank are strong and steady and the overall exposure to the housing financial companies is 3.2 percent and 90 percent of this is rated AA or better, " clarified Monga.
He further clarified that the 'short-term liquidity crunch in the non-banking finance companies had eased and the exposure to NBFCs is 'A' rated or higher'.
In a news report, it was said that promoter and holding companies of the bank, Yes Capital and Morgan Credits, paid about Rs 700 crore in cash collateral to Franklin Templeton Mutual Fund and Reliance Mutual Fund to avoid a breach of covenants in non-convertible debentures. However, the bank clarified that it is independent of the promoter companies.
"The Reserve Bank of India (RBI) has access to all information including this. So the structure of these companies is independent of the bank. It is not right to call them group companies, they are promoter companies. So they are the group companies of the promoter structure and not the group company of the bank. There is no interest or dealings of the bank with these companies. Mr Rana Kapoor has already conveyed his ownership in these entities to his family. So he himself has no interest in those entities either," Monga said.
As of June 2018, Yes Capital and Morgan Credits hold 3.28 percent and 3.05 percent respectively, while Kapur’s associate firm Mags Finvest held 1.7 percent in the bank.