The Yes Bank board at its annual general meeting (AGM) on Wednesday studiously avoided shareholder queries on Rana Kapoor’s future at the lender. The meeting was held in the backdrop of two directorial exits by independent members earlier in the week after the promoter had made demands for a re-entry. Kapoor, had last month written two letters to the board, seeking re-induction at the lender’s highest decision making body and lost compensation that ran into crores of rupees. He was represented by his wife Bindu Kapoor at the AGM, the first to be held after Kapoor stepped down as the executive boss of the bank he had helped found. Ravneet Gill, the bank’s new CEO, promised shareholders that the management would make every effort to keep their trust, focus on risk management, and restore the bank to its old glory. He also said that the bank’s asset quality issues were being blown out of proportion.
“The market has responded a lot more conservatively to our asset quality issues than what is justified,” Gill told shareholders. “The bank’s asset quality issues are not cyclical; 3-4 of our large exposures are facing liquidity issues and since these are concentrated exposures, the market wants to see the resolution to these names before they are able to raise a green flag on us.” The AGM comes just days after high-profile board exits at the lender that has been the biggest loser on the Nifty 50 – the index for India’s biggest stocks – over the past one year. Mukesh Sabharwal, chairman of the nomination and remuneration committee, quit on Tuesday citing personal reasons. Former interim CEO Ajai Kumar had quit on Monday, also on personal grounds. The Reserve Bank of India (RBI) had refused to approve the renewal of Kapoor’s tenure as chief executive of the bank last year, citing governance and accounting lapses, forcing it to hire a new CEO. The RBI had nominated retired deputy governor R Gandhi to the board of Yes Bank last month to make sure that the lender adhered to prudential norms and that checks and balances were in place.
“The recent resignations of board members of Yes Bank add to the growing number of board-member exits seen since last year. Coupled with the recent rating downgrades, we believe it is an overhang on the stock performance,” said Lalitabh Shrivastawa, AVP – research, Sharekhan. “We believe it is a concern and are not advising fresh investment at these levels.”
The stock has lost 60 per cent in the past one year.
Moody’s Investors Service on Tuesday placed Yes Bank’s ratings under review for a downgrade, citing its large exposure to debt-laden non-banking financial companies (NBFC) and the possibility that the bank’s loans under watch list could become non-performing assets (NPAs). “Rating agencies are concerned about how resolutions happen in a few large accounts, but these are granular exposures... resolutions in these accounts are ongoing,” Gill told shareholders. “I am very confident that once we are able to raise capital and show resolutions, many of these concerns will go away, (and) we will come back to a positive rating.” The private lender is facing investor wrath over the actual amount of its stressed assets, and is in talks with private equity investors to raise equity funds to help rebuild investor confidence after initial attempts at share sales to a broader set of institutional investors failed to materialise, BT had reported earlier. Gill told shareholders that the bank was looking to raise money through either a qualified institutional placement or private equity sale.