On July 7, Yes Bank’s Board of Directors decided to approve the decision of making a Further Public Offering (FPO) of Yes Bank shares. The bank plans to raise around Rs 15,000 crore and enhance its capital adequacy to over 10 per cent in order to restore its capital adequacy ratio considering the heavy provisioning made of legacy loans after SBI-led consortium took it over for revival.
The bank has decided to file its offer documents with the Registrar of Companies and Sebi to offer its shares via a public issue. The bank presently has a mid-cap of Rs 32,317 crore. The bank has also sold some of its liabilities to scale down the capital requirements and has been planning to abrogate its bad loans as a part of its capital adequacy ratio restoration plan.
In June, Yes Bank’s MD & CEO, Prashant Kumar said, “The tier-1 capital is 6.3% and we will now raise more capital. We have taken approval for Rs 15,000 crore. To achieve 8% capital adequacy, we need Rs 4,000 crore. But we don’t want just 8% capital adequacy, we want to have a buffer for any more accounts in future, capital for the 10% growth planned for this year and we do not want to raise capital for next three years. This is why we decided on Rs 15,000 crore. We are looking at new investors, and existing shareholders who came in the first round will see their share come below 50% unless they feel there is value in investing”.