Explaination of PPT :https://youtu.be/0iLueBUzQag
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3. YES Bank looks to carve out technology
platform, transfer stressed assets to two arms
• The lender is creating a structure for what will be an in-house bad
bank that will house all its bad loans and also buy bad assets from
other lenders. A consultant to design this project will be appointed in
the next 2-3 weeks, after which the lender will approach the Reserve
Bank of India for approval. The bank would also create a separate
subsidiary for its technology platform that could be valued at upwards
of $7 billion.
• Going forward this entity will not only handle the stressed assets of
Yes Bank, but our plan is it would buy bad loans of other banks so we
are treating it like a bad bank. This would work on an ARC model and
will be completely arms length managed by professionals and any
upside would be shared between the equity holders.
4. Kumar(Yes Bank MD) view on it…
• At the end of the June quarter the bank had bad loans of Rs 32702
crore, almost 17.3% of its advances book. Kumar said the bank has
identified all large legacy assets and made 75% provisions against
them. Three third party consultants conducted due diligence on loan
portfolios worth Rs 81,000 crores and estimated recovery at Rs
55,000 crores. After which the bank set aside provisions worth Rs
33,000 crore against them.
• If we take out all the bad assets and provisions associated with it, the
remaining bank would be among the best in the financial sector,”
Kumar said. “The only concern with Yes Bank is it’s stressed asset
portfolio, you take out that we have a lot of management bandwidth,
capital will be released.”
5. About technology Platform
• The bank also has plans to sell stake in its technology platform business
which is said to be one of the most advanced among banking peers. It
holds 37% market share in UPI transactions with transaction value of more
than Rs 2.5 lakh crore in the June quarter. It is also the number one
remitter bank on the immediate money payment system or IMPS platform
with transaction value of nearly Rs 27,000 crore.
• “When we were talking to our international investors for capital raise, so
many were asking us why don’t you create a separate infrastructure and
monetise it,” Kumar said. “As a strategy we are not against it but it would
take us 12-18 months to return to normal operations and then we will
explore this option. But we are in a position to have these capabilities
which if it is put up in a separate infrastructure would draw a valuation that
would surprise many.”
• Kumar added that it was difficult to put a value to the bank’s technology
business before conducting proper due diligence.
6. YES Bank puts AMC arm on the block
• The bank, which was taken over by lenders led by State Bank of India as part of a
rescue package, has received proposals from six entities expressing interest to
takeover YES Mutual Fund, which had assets under management of Rs 57 crore as
of June 2020, down from Rs 2,000 crore in March 2019.
• YES Bank has shortlisted two prospective buyers and sent the names to the
Securities and Exchange Board of India (Sebi) for approval, the two people said.
• The deal is expected to finalised soon after Sebi gives its approval to the bank.
The decision to sell the mutual fund business was taken at a board meeting late
in July, the people said.
• The entities that are said to have shown interest in buying out YES Mutual Fund
include two Bengaluru-based technology firms, one leading wealth manager and
a proposed joint venture between an Indian entity and a leading global private
equity fund, people cited above said. One of the two technology firms is believed
to be an e-commerce payment company. The names of the prospective buyers
could not be ascertained.
