The domestic financial institutions that have bought equity so far in yes Bank, which is reeling under liquidity crunch, have benefited immensely under the private bank’s restructuring scheme.
It may be recalled that seven private banks and financial institutions and state bank of India (SBI) under the public sector had bought Rs 10,000 crore in the bank by purchasing Rs 1,000 crore shares of Yes Bank at a value of Rs 10 (two rupees face value and rs 8 premium). On Tuesday, the bank’s shares closed at Rs 58.65 per share.
If investors sell a fraction of these shares, they can get nearly six times more returns.
These financial institutions have bought shares
According to news agency IANS, ICICI Bank and Housing Development Finance Corporation (HDFC) have bought 100-100 crore shares worth 1,000 crore rupees each in yes back. The current price will receive around Rs 1,500 crore. Thus, not only will they recover the entire investment amount, but they also get good returns.
Similarly, selling only a portion of their share to other banks can benefit manifold from their investments. 8 SBI-led banks and financial institutions have invested around Rs 10,000 crore to strengthen the bank’s base capital. The SBI-led group on investment in Yes Bank has also included ICICI Bank, HDFC Ltd., Axis Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank, and IDFC First.
100 percent gain in three days
Yes Bank shares have gained more than 100 percent in the last three trading days. Yes Bank’s stock boom comes at a time when the Indian stock exchanges are going through their worst phase due to the coronavirus crisis.
On the second trading day of the week, yes Bank shares rose nearly 60 percent. Yes Bank shares rose to Rs 58. Earlier on Monday and Friday, yes Bank’s shares had seen a spurt. The bank’s history did not see such an increase.
Moody’s raises ratings
Good news has come from rating agency Moody’s for Yes Bank. In fact, Moody’s has positives Yes Bank’s outlook and improve its credibility. The rating agency has taken this step in view of the rapid improvement in capital position under rbi’s restructuring plan.