The eight financial institutions who swooped in to save Yes Bank from the brink of a collapse were seen as no less than heroes for coming to the financial industry’s rescue.
These financial institutions had together pooled in Rs 10,000 crore as investment at Rs 10 per share in Yes Bank
when it was in dire need of capital, and facing pressure from depositors.
However, data released by Yes Bank on its shareholding pattern as of March 17 and March 31 shows that at least three of these white knights have sold small parts of their stake within two weeks of making the investment.
While Kotak Mahindra Bank sold 9.5 percent of its stake in Yes Bank, IDFC First bank sold 16.1 percent stake and Federal Bank sold 19.6 percent of its holding between March 17 and March 31, 2020.
As part of the bank’s reconstruction scheme, the investments made at Rs 10 per share, came with the condition that at least 26 percent of SBI’s stake, as the lead investor, would be locked-in for 3 years. The other seven investors under the scheme are also required to comply with a three-year lock-in for at least 75 percent of their investment amount. This means that they cannot sell more than 25 percent of their stake in Yes Bank for the next three years.
Yes Bank had disclosed in early March that SBI, the largest investor in Yes Bank, had put in Rs 6,050 crore (subscribing to 605 crore shares), HDFC Ltd and ICICI Bank Rs 1,000 crore each (for 100 crore shares each), Axis Bank Rs 600 crore (for 60 crore shares), Kotak Mahindra Bank Rs 500 crore (for 50 crore shares), Bandhan Bank & Federal Bank Rs 300 crore each (for 30 shares each), and IDFC First Bank Rs 250 crore (for 25 crore shares) in the bank.
As per the latest data release on exchanges, Kotak Mahindra Bank held 45.28 crore shares in Yes Bank as of March 31, down 4.76 crore shares from the initial subscription of 50 crore shares.
The same data shows that Federal Bank, that held 30 crore shares of the bank as of March 17, now holds 24.13 crore shares, selling 5.87 crore shares within 14 days.
The third bank that also sold part of its stake is IDFC First Bank. While it held 25 crore shares of March 17, the latest data shows that the bank has sold 4.02 crore shares and holds 20.98 crore shares as of March 31.
The other banks did not sell any stake as of March 31 data available on exchanges.
Incidentally, ICICI Bank, which had subscribed to 100 crore shares of Yes Bank earlier, increased its holding by about 2 lakh shares as of March 31.
Yes Bank shares traded at anywhere between a low of Rs 22 and a high of Rs 87 between March 17 and March 31. Simply put, this means the three banks that sold stake during this period could have made anywhere between 2X to 8X gains on their investment of Rs 10 per share.
Rajnish Kumar, chairman of State Bank of India
, had remarked on March 17 in a press conference, "It's my commitment that SBI will not sell a single share before the three-year lock-in. This is in spite of the regulatory and government permission to pare down our equity to 26 percent after three years.”
Kumar went on to say that none of the banks were looking to sell their holdings ahead of the three year lock-in period.
To be fair, these lenders are well within their rights to sell up to 25 percent of their investment over the next three years, as per the terms of investment detailed in the Yes Bank Reconstruction Scheme approved by the government and RBI. Given the current scenario where the COVID-19 related uncertainties may only add to asset quality pressures, capital conservation is also probably necessary for some of these banks.
However, for the investors, who viewed Kotak Mahindra, IDFC First and Federal Banks investments as 'confidence capital' in Yes Bank, selling stakes, albeit small, within a fortnight is unlikely to go down too well.
|Investor||Initial Share Allotment||Shares Held as of March 31 ||Shares Sold||%age of Holding Sold Between Mar 17-31|
|5.||Kotak Mahindra Bank||50,00,00,000||45,27,50,000||4,72,50,000||9.50%|
|8.||IDFC First Bank||25,00,00,000||20,97,94,680||4,02,05,320||16.10%|