A brief timeline of Yes Bank's saga

[jdimmick]

Mid 2017: RBI forced Yes Bank to disclose that nonperforming loans were $630 million more than the $113 million reported in the company’s audited accounts for the year ended in March 2016. The divergence widened to almost $1 billion a year later.

June 12, 2018 : Yes Bank's shareholders approve Rana Kapoor's re-appointment as managing director (MD) and CEO for three years from September 1. (till August 2021)

Aug 20, 2018: Stock price closes at the lifetime high of 393.85. Intraday price reached 404.

Sep 19, 2018: The RBI cuts short Kapoor's term till January 31, 2019.

Sep 21, 2018: On the first day of trade after the RBI's announcement, YES Bank shares tank over 30 per cent, and the lender loses as much as $3.1 billion in market value. Stock closes at 227.05.

Sep 25, 2018: The bank’s board decides to seek the RBI’s nod to extend Kapoor's term until at least April 30, 2019.

Oct 11, 2018: Search for new CEO begins.

Oct 17, 2018: The RBI refuses to give Rana Kapoor more time at the bank and asks the lender to find a new CEO by February 1, 2019.

Oct 25, 2018: YES Bank's second-quarter profit misses estimates by a wide berth as provisions for bad loans and mark-to-market losses more than double, and asset quality deteriorates. They also declared that the bank has an exposure to debt-laden IL&FS. Stock falls by 9% in the next session and closes at 180.55.

Nov 14, 2018: Non-executive chairman Ashok Chawla resigns from YES Bank's board on corruption charges. Vasant Gujarathi also steps down as independent director.

Nov 15, 2018: OP Bhatt resigns as an external expert of the search and selection committee, due to “potential conflict of interest”.

Nov 19, 2018: Independent director Rentala Chandrashekhar resigns

Nov 20, 2018: Yes Bank says that selection process for the MD and CEO is on track, recent resignations of board members bear no impact. Efforts are underway for mutual resolution between Rana Kapoor and Madhu Kapur and her family, the co-promoter. The board now consists of seven members, after addition of Uttam Prakash Agarwal.

7 Dec, 2018: Stock closes at 166.10. Down by 58% in 4 months.

Jan 24, 2019: Yes Bank declares Deutsche Bank’s Ravneet Singh Gill as its MD and CEO. Stock jumps 14%. Closes at 213.85.

Jan 31, 2019: Pralay Mondal has tendered his resignation as Senior Group President and Head - Retail & Business Banking of the bank. Stock falls by 4% in the next session and closes at 185.65.

Feb 14, 2019: Yes Bank received "no observation on divergence" in the bank’s asset classification and provisioning in the RBI’s Risk Assessment Report for FY2018. Stock jumps 29%. Stock closes at 221.00

1 Mar, 2019: Ravneet Gill takes charge as Yes Bank MD, CEO

2 April, 2019: Stock closes at 280.4. Rallied 66% in 1.5 months starting in mid-feb 2019.

26 April, 2019: YES Bank reports surprise Q4 loss of Rs 1,507 crore as provisions jump 9 times YoY. FY18-19 net loss reported as 1931 crores as compared to FY17-18’s net profit of 1203 crores. Stock falls 29%. Closes at 168.00.

15 May, 2019: RBI appoints former deputy governor Rama Subramaniam Gandhi as an additional director on the board of Yes Bank for two years. Stock falls 4%. Closes at 143.65.

13 Jun, 2019: Multiple brokerages cut Yes Bank stock ratings and downgrades it to sell. Stock falls by 13% and closes at 117.2.

17 Jun, 2019: Yes Bank plans to raise $1.2 billion to boost capital, CEO says

18 Jun, 2019: Stock falls by 13% and closes at 98.45.

30 Jul, 2019: Stock falls by 9% and closes at 86.10.

9 Aug, 2019: Bank announces opening of QIP to raise Rs 2000 crores. Stock falls by 8% and closes at 82.10.

10 Aug, 2019: Anurag Adlakha appointed as CFO; Raj Ahuja to take charge as CSO

13 Aug, 2019: Stock falls by 10% and closes at 73.6.

20-21 Aug, 2019: Concerns over bank’s exposure to CG Power and Industrial Solutions which has been hit by alleged financial irregularities and unauthorised transactions. Yes Bank owns 13 per cent stake in that company. Stock fell by 21% in these three sessions and on 22nd Aug closed at 56.30.

19 Sep, 2019: Promoter firm Morgan Credits Pvt. Ltd (MCPL), owned by Rana Kapoor’s family, sold 2.3% stake in the bank on 19 September to an unknown buyer. The stake sale reduced Rana Kapoor’s shareholding in Yes Bank to 7.4%. Earlier, Kapoor and his two family-owned companies, MCPL and Yes Capital, held 9.65% stake in the lender, with MCPL alone holding 2.76%. Stock fell by 15% and closed at 54.15.

26 Sep, 2019: Rana Kapoor looking to sell his entire Yes Bank stake to Brookfield Asset Management (as per reports). Stock fell by 5% and closed at 53.70. (Later it was reported that this week the stake sale of 1.8% was already done.)

30 Sep, 2019: Bank receives RBI’s approval to raise capital. Reports of “more bad loans, higher haircuts because of slower resolutions and uncertainty around equity raising”. Investors continue the sell-off over concerns about the bank's exposure to HDIL, DHFL. Stock fell by 15% and closed at 41.45.

1 Oct, 2019: The promoters, YES Capital (India), Morgan Credits Private and Rana Kapoor together sold a combined stake of 2.75% of the Yes Bank through the open market, taking their combined stake to 4.72%. Stock fell by 22% and closed at its decade lowest at 32.20.

From its lifetime high of 393.85 in Aug 2018 it has fallen by 92% to 32.2.

A part of this timeline is reconstructed with the help of this article. The events post the article date and the respective stock prices are added by me.

Yes Bank’s exposure majority seems unrecoverable.

Another way to look at the above sheet - stressed exposure across banks - Yes Bank’s is the highest.

A two months old thread from this sub - Will Yes Bank go bankrupt?

What next for Yes Bank? Where’s it heading? Bankruptcy? Something else?

 

[resjudicata]

@jdimmick I have a savings account in Yes Bank, should I start moving my money elsewhere?

 

[jdimmick]

@resjudicata I think you should. Can't say anything about the bank's future but it's better to be safe.

 

[cowabunga]

@jdimmick Youngling here, WCGW worst case?

Assuming the bank does go down, will anyone step in to take responsibility for your deposit or the money is lost forever?

 

[crixus123]

@cowabunga Ideally, when a bank fails, RBI is supposed to merge it with an existing bank, and protect deposits / savings account balance of the depositors.

Or, they can declare the bank has failed, invoke DGCIC insurance and pay every depositor 1L or their amount kept with the bank, whichever is higher lower.

But if you notice how RBI has been handling mis-management in co-op banks, a question is to be asked if you'd ever get your money back.

PMC is only the latest in a string of RBI imposing section 35A corrections on banks over the years. PMC Bank is getting coverage because it has a 11.6k Cr. book of deposits, and media have chosen to keep it in the news.

But there have been lot of cases over the years, when RBI imposed directions on the bank, and it took a few years before anyone saw any money.

Maratha Sahakari bank had been under RBI directions since 2016, and every time their 6 month period expires, RBI simply extends it for another six months.

Your money is not lost forever, but you most likely won't get to see any of it before years.

 

[cordlessvacuumcleaner]

@crixus123

Your money is not lost forever, but you most likely won't get to see any of it before years.

That sounds worse than the bank collapsing, in that case you atleast get 1 lakh back (assuming you have less that amount there)

 

[kreke]

@crixus123

they can declare the bank has failed, invoke DGCIC insurance and pay every depositor 1L or their amount kept with the bank, whichever is higher.

higher or lower? I thought the dgcic insurance was limited to 1L.

 

[crixus123]

@kreke Right, sorry. It's lower of actual deposit amount, and 1L.

 

[kreke]

@cowabunga deposits are not safe, beyond a very small sum (1 lac or something), even in sbi.

 

[jdimmick]

@cowabunga

As per the RBI guidelines, all the commercial banks and cooperative banks are mandatorily required to insure the deposit under the Deposit Insurance and Credit guarantee corporation (DICGC). Each depositor of a bank is covered for maximum up to Rs 1 lakh.

Source

Best thing to do is move your money when you sense there is substantial problem going on with your bank (currently Yes Bank, RBL, Laksmi Vilas). And going ahead in future, try not to have money only in one bank account. Spread it across multiple bank accounts and definitely have one in PSU bank.

 

[cowabunga]

@jdimmick DBS safe I guess.

 

[guitaoist]

@resjudicata if I were you, i would do it tonight with imps/upi.

 

[diznug]

@jdimmick

What next for Yes Bank? Where’s it heading? Bankruptcy? Something else?

To answer that question, one would have to look at the lending structure and composition of Yes Bank. I recently watched this excellent video by Couptaji in which he explains why PMC Bank became bankrupt. Until last month they had only 4% NPA but recently, it turned out that they had lent about 73% of their entire money to one single entity named HDIL. Yes, this is the same HDIL which brought down Yes Bank and PMC also went bankrupt in the ripple effect. Now, their NPA has increased to 77% (4+73). The real question is how can a bank lend 73% of their depositor's money to one single entity and nobody raises an eyebrow?

I don't know what is Yes Bank's lending structure, if it is anything similar to PMC's then there is no coming back from this. However, considering that the stock price didn't budge below the levels of 30 (despite all the negative news coming out against co-op banks), I am somewhat hopeful about Yes Bank. Yes, investor's trust has taken a nosedive after knowing that they were associated with HDIL and trust is a very important factor for banks. However, if the managers and admins of the bank are determined to fight it out in the hard times, then who knows, Yes Bank could be among one of the most successful Indian banks a couple years from now! It all depends on how their team and management handles this situation now.

 

[jdimmick]

@diznug I have already added this sheet in the post which gives some idea of current lendings of Yes Bank.

I really doubt if Yes Bank can come back from this. If they do, well and good. Can't say whether the stock price will move from here, but it's definitely not going up. I daresay, it might even touch 20s in coming weeks.

I can understand frauds at a co-operative banks like PMC when it comes to giving loans to HDIL. But if a big player like Yes Bank is doing the same level of shit when giving loans to HDIL then it's impossible to trust them anymore.

 

[diznug]

@jdimmick

But if a big player like Yes Bank is doing the same level of shit when giving loans to HDIL then it's impossible to trust them anymore.

Well, do you remember that UTI Bank (now Axis Bank) also did the same level of shit in the mid 90s? They were also in a precarious position due to bad lending and almost everyone in the market had lost faith in them, their reputation was in shambles. And yet, see where Axis Bank is today!

However, the important thing is that the Govt. and RBI didn't lose faith in UTI at that time but instead bailed them out and paid out all depositor dues. Thus, Govt and RBI support is the key - if they decide to support Yes Bank and not let it down, then you can well see its stock price climbing up.

 

[montse811]

@diznug UTI bank was a bank promoted by PSUs & other entities promoted by PSUs. That's why it was bailed out by Govt. I hope Govt doesn't bail out Yes Bank (not that I support bailouts of PSUs).

 

[diznug]

@montse811

I hope Govt doesn't bail out Yes Bank

Yes, that would work in a pure capitalist world, but ours is a socialist govt., remember! Heck, even USA which is known to be one of the most capitalist of nations bailed out Lehman Bros and many other banks which suffered the home loan crisis in 2008! I guess politicians simply give in to populist sentiments in these times and simply bail them out. The problem is that they are politicians, not economists.

 

[darlencegen]

@jdimmick Other than bad loans, what other risks YES faces?

 

[femilon]

@darlencegen Unstable governance,

Frequent RBI interruption

 

[jdimmick]

@femilon Frequent RBI interruption is not a risk. They are corrective actions/measures/steps.