Yes Bank Ltd : Madhu Kapur Group gives up promoter status

Yes Bank Office in Mumbai
Image Source: The Print

Yes Bank Ltd’s late co-founder Ashok Kapur’s family has officially given up its promoter status of the bank. The move has thus put an end to the rocky history between the two.

Kapur’s wife, Madhu Kapur, and their children, collectively known as Madhu Kapur and group, have agreed to reclassified as public shareholders of the bank. This information was released in a stock exchange notification by Yes Bank Ltd on Saturday.

As per the latest data, Madhu Kapur’s total stake in Yes Bank stood at 1.12% as of March 31. Mags Finvest held 0.3% in the bank. Rana Kapoor, co-founder and ex-chief executive, holds no stake in the bank. Neither by himself nor through proxy firms like Yes Capital (India) Pvt Ltd and Morgan Credits Pvt Ltd. Kapoor, however, is yet to be declassified as a promoter.

The Bank Battles

In 2013, the Kapoor and Kapur families began a bitter legal battle.

One of the key points of contention was the representation of the Kapoors and the Kapurs on the bank’s board. Madhu Kapur argued that since her husband passed away, the family was entitled to nominate a representative to the Bank board. The family was in favour of Ms Shagun Kapur Gogia joining the board. However, the drama intensified when Rana Kapoor, the then head of the bank, refused. His reasoning for the same was that Gogia did not have adequate experience. The board supported Rana’s reasoning.

The Bombay High Court in 2015 ruled in favour of the Kapur family. This judgement stated that the promoters must together nominate 3 directors on the board. Therefore, the ruling gave Madhu Kapur a significant say in the Yes Bank Board appointments.

However, despite this, Gogia was not given a seat at the board table.

Legal Drama Intensifies

While the case was in appeal, an unexpected turn of events changed everything.

In 2018, the RBI asked the Yes Bank Board to reconsider Rana Kapoor’s re-appointment as the CEO of Yes Bank. Then, in September of 2018, the bank’s board announced its withdrawal of the request of extension of Kapoor’s CEO stint.

Thus, in January 2019, Rana Kapoor stepped down as CEO of the bank he built and co-founded. Post his departure, Ravneet Gill was appointed Yes Bank’s CEO.

Thanks to his exit as CEO, Kapoor now needed Madhu Kapur and her family’s support in order to stay on the board. This was because the court had given the two families (promoters) joint nomination rights.

Now, the two families agreed on allowing Gogia to join the Yes Bank board, that was founded by her father. Ravindra Kumar Khanna was also a nominee of the Indian partners who had joined the board.

Things continued to spiral out of control for Kapoor, and by October 2019, Kapoor had lost all his shareholdings in Yes Bank Ltd.

Yes Bank Remodelled

With Gill at the helm of Yes Bank, it made numerous attempts in trying to raise $2 billion to help mask the bank’s extensive bad-loan pool. Unfortunately, all these attempts failed.

The RBI, in March, suspended Yes Bank’s management and the board. This was because the lender’s financial position had deteriorated pretty horribly. The deterioration brought it to the point of non-viability. The RBI appointed Prashant Kumar as the new CEO and Sunil Mehta as the non-executive chairman.

Further, the regulator devised and initiated a rescue plan for Yes Bank. This rescue plan entailed the State Bank of India and a set of private sector lenders infusing equity into the dying bank.

The Climax

Yes Bank is now owned by a collective of Indian lenders, who helped infuse equity into the bank.

For the Jan-Mar quarter, Yes Bank reported a net profit of Rs 2629 crores. The profit was recorded after the bank wrote-back Rs 8415 crore in additional tier-1 bonds. The new management and board seem to be doing an increasingly good job, and hope to raise Rs 15000 crore. They hope to raise the money before June 30, 2020. Further, they also hope to diversify its ownership alongside procuring more capital.

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