ICICI Bank, Axis Bank, HDFC Bank to invest in Yes Bank; Cabinet approves restructuring scheme for crisis-hit lender

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New Delhi: Boards of private lenders, ICICI Bank, Axis Bank, and HDFC Bank on Friday (March 13) decided to invest in the crisis-hit Yes Bank. The Union Cabinet also gave its nod for the troubled bank`s restructuring scheme to safeguard depositors` interest.

HDFC Bank stated that its board has approved an investment of Rs 1,000 crore in Yes Bank. In a regulatory filing, the lender said this investment is likely to result in the corporation holding in excess of 5 per cent shareholding in Yes Bank. The bank will acquire 100 crore equity shares for Rs 10, adding that the investment will be completed by March 31.

In a regulatory filing today, Axis Bank said that it will acquire 60 crore shares of Yes Bank for Rs 10 per share. The Axis Bank statement said, "The Board of Directors of Axis Bank Ltd at its meeting held today has accorded approval to invest a sum of up to Rs 600 crore for acquiring up to 60 crore equity shares of Rs 2 each of Yes Bank Limited, for cash, at a premium of Rs 8 per equity share, under the proposed Scheme of Reconstruction of Yes Bank Limited under the Banking Regulation Act, 1949." 

Kotak Mahindra Bank has also confirmed that it will invest Rs 500 crore in Yes Bank to acquire 50 crore shares, stating "The bank has issued an equity commitment letter to invest Rs 500,00,00,000 (the equity commitment) in Yes Bank Limited for subscription of 50,00,00,000 equity shares of Yes Bank at a price of Rs 10 per equity share." 

A similar announcement was also made by ICICI Bank as its board approved a Rs 1,000 crore investment in Yes Bank via equity route. ICICI Bank will reportedly acquire 100 crore equity shares of Yes Bank at Rs 10 per share, including a premium of Rs 8 per share.

The ICICI Bank statement said, "This investment is likely to result in ICICI Bank holding in excess of 5 per cent shareholding in Yes Bank, with the final shareholding to be determined based on the final Scheme of Reconstruction and share issuance thereunder." 

The announcement came in the wake of the Union Cabinet's approval for the Yes Bank`s restructuring scheme to safeguard depositors` interest and ensure a stable financial banking system. 

Under the Reserve Bank-proposed reconstruction plan for Yes Bank, the State Bank of India will pick up 49 per cent of the equity, while private investors will be allowed to buy the rest.

Finance Minister Nirmala Sitharaman told media that the SBI will hold at least 26 per cent stake in the private bank for a minimum period of three years. Similarly, the other investors will also be mandated to have a similar lock-in period for 75 per cent of their investment in the bank. 

Sitharaman stated that the details of the scheme will be notified soon, adding that Yes Bank`s moratorium will be lifted at 16.00 hours, after three working days of the scheme being notified. 

The office of the administrator shall also stand vacated after seven days from the cessation of moratorium and the new Board will take over the bank, she added.

Last week, the RBI had placed Yes Bank under moratorium and capped the withdrawal limit at Rs 50,000 till April 3, due to deteriorating financial health of the bank. It also superseded Yes Bank`s board of directors and appointed former SBI CFO Prashant Kumar as its administrator.

(With Agency Inputs)