Troubled lender Yes Bank reports wider-than-expected loss
Troubled Indian lender Yes Bank reported a wider-than-expected quarterly loss of 185.6 billion rupees ($2.5 billion), and said it was continuing to analyse the allegations of wrongdoing by former Managing Director Rana Kapoor.
The loss, as reported in a filing late on Saturday, was significantly wider than the 5.7 billion rupees loss expected by analysts, according to Refinitv data. For the quarter a year ago, it had turned in a profit of 10.02 billion rupees.
The lender also indicated it would completely write down bonds worth around 84 billion rupees as part of a state-led restructuring plan, which involves the State Bank of India picking up a 49 per cent stake in Yes Bank.
India last week approved a rescue plan for Yes Bank, once considered a rising star after it was set up in 2004 but now struggling with bad loans. Earlier, the Reserve Bank of India placed it under a moratorium, restricting deposit withdrawals and superseded its board.
Authorities have also opened investigations into Yes Bank's lending practices that led to its failure, while its founder Kapoor was detained and a case of money laundering registered against him.
The lender said its asset quality took a severe beating in the third quarter, with gross bad loans as a percentage of total rising to 18.87 per cent as of December-end, from 2.1 per cent a year earlier.
Provisions also jumped to 247.66 billion rupees, from 5.5 billion rupees a year ago. The bank said its deposits had dropped by 26 per cent to 1657.55 billion rupees, while advances were down 24 per cent at 1860.99 billion rupees. The capital adequacy ratio of the bank stood at 4.1 per cent for the quarter, while its Core Equity Tier 1 ratio (CET1) was 0.6 per cent - much lower than the regulatory requirements of 7.375 per cent.
In February, the bank said it would delay its third-quarter results by at least a month as it focused on raising capital. In its filing, Yes Bank said it will completely writedown 84 billion rupees worth of Additional Tier 1 (AT1) notes.
AT1 securities are a type of contingent convertible bond (CoCo) - perpetual instruments designed after the financial crisis to try to ensure investors, rather than taxpayers, would be on the hook if a bank runs into financial difficulties.
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