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Tuesday, November 19, 2019

Embattled Yes Bank’s Bad Loans Swell on Regulatory Scrutiny

(Bloomberg) -- India’s central bank has unearthed more than $450 million in extra bad loans at Yes Bank Ltd., the lender that is contending with a shadow-banking crisis and concerns over soured debt and capital.

Gross non-performing assets assessed by the Reserve Bank of India were 32.77 billion rupees ($457 million) higher than Yes Bank had disclosed as of March 31, the Mumbai-based lender said Tuesday. The bank has already classified 12.59 billion rupees of the divergence as bad loans as on Sept. 30, it said.

An earlier dispute with the central bank over Yes Bank’s reporting of bad debts culminated in co-founder Rana Kapoor’s departure as chief executive officer at the start of this year. New CEO Ravneet Gill is trying to raise funds by December to revive growth and reassure investors that the worst is over for the bank, which has tumbled 65% this year.

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Investors are likely to focus more on Yes Bank’s fund-raising plans than the latest asset-quality divergence, according to Bloomberg Intelligence analyst Diksha Gera. “Its impending capital raise continues to be the biggest catalyst for the bank’s outlook,” she wrote.

Yes Bank said earlier this month that it has attracted $3 billion of proposals for a stake-sale offer. A board meeting will be called by the end of November to finalize raising of capital, the bank said Tuesday.

The RBI assessed that the bank’s non-performing assets stood at 111.6 billion rupees as of March 31, more than the 78.8 billion rupees Yes Bank had disclosed for the year, the lender reported.

The central bank also found a divergence of 9.78 billion rupees in provisions, the bank said. Yes Bank has made provisions of 3.46 billion rupees until Sept. 30 and has to set aside a further 6.32 billion rupees for 2018-19, it said.

For more on the divergence report, click here

Other lenders including Bank of India have disclosed divergence in bad loans and provisions recently.

(Updates with analyst comment in the fourth paragraph. An earlier version corrected the figure for divergence already classified in the second paragraph)

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