Dubai’s largest lender, Emirates NBD, has expressed preliminary interest and is evaluating the submission of a bid to acquire a majority stake in Yes Bank, two people familiar with the development said.
On April 12, Moneycontrol reported that Japan’s Mitsubishi UFJ Financial Group (MUFJ) and Sumitomo Mitsui Banking Corp. (SMBC) were also considering a bid for India’s sixth largest private sector lender in terms of assets.
“Yes, Emirates NBD is exploring this opportunity,” one of the people cited above said.
According to a second person familiar with the proposed transaction, initial bid submissions for Yes Bank are expected by the end of the month.
Both spoke to Moneycontrol on the condition of anonymity.
Multiple email queries from Moneycontrol to Yes Bank and SBI remained unanswered at the time of publishing this article. This article will be updated as soon as we hear from them.
An official spokesperson of Emirates NBD said, “As a matter of company policy, Emirates NBD declines to comment.”The development comes amid the State Bank of India-led consortium, which bailed out Yes Bank in 2020, exploring plans to sell its stake, with a three-year lock-in period for investors ending in March 2023.Investment bank Citi has been mandated to find a new promoter.
At the end of trading on April 19, Yes Bank had a market value of around Rs 68,900 crore. At those levels, a majority stake of at least 51 percent would be worth Rs 35,139 crore.
According to exchange data, in the public category, SBI, the largest shareholder, holds a 26.13 percent, with LIC, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank and IDFC First Bank holding a combined minority stake of 13.84 per cent.
Additionally, top private equity firms Carlyle and Advent International entered the lender in July 2022, which raised Rs 8,900 crore from both investors via a combination of equity shares and warrants to acquire up to a 10 per cent stake each.
The total holding of all the lenders, LIC and the two PE firms in Yes Bank( pre-warrant conversion) is 52.83 per cent.
On January 9, 2023, Moneycontrol reported that Emirates NBD had submitted an expression of interest for state-run IDBI Bank as well, which has been put on the block as part of the government’s disinvestment programme.
Yes Bank: The Gulf Angle
National Bank of Dubai (NBD), the first national bank established in Dubai and the UAE was set up on June 19, 1963. NBD merged with Emirates Bank International (EBI) on 06 March, 2007, to form Emirates NBD. As of September 30, its total assets were around $228 billion.
Emirates NBD has a leading retail banking franchise, with 850 branches and 4,431 ATMs / SDMs in the UAE and overseas as of January 25. It is a major player in the UAE corporate and retail banking arena and has Islamic banking, investment banking, private banking, asset management, global markets & treasury and brokerage operations. It also operates Liv., the lifestyle digital bank for millennials.
The acquisition of DenizBank represented a significant milestone for Emirates NBD with the group expanding its presence to 13 countries, servicing over 17 million customers. The lender has operations in the UAE, Egypt, India, Turkey, the Kingdom of Saudi Arabia, Singapore, the United Kingdom, Austria, Germany, Bahrain, Russia and representative offices in China and Indonesia.
Yes Bank: What's the road ahead, and why are suitors keen?
Recently, Yes Bank’s CEO said the lender would boost lending to small- and mid-sized companies as it tries to push up its return on assets.
“The single agenda (for the bank) is to focus on profitability without doing anything aggressively,” Prashant Kumar said in an interview. “The first step for us is to achieve a RoA of 1% in the next two years and 1.5% by 3-5 years.”
Yes Bank’s return on assets, the ratio of how profitable a company is compared with its total assets, was at 0.2% for the October-December quarter.
According to an earlier analysis by Moneycontrol PRO, “Today, Yes Bank is adequately capitalised. It is growing its deposits despite the systemic challenge, has diversified the asset book, making it granular, and has addressed the huge legacy NPA issue with the sale of bad assets to an ARC (asset reconstruction company).”
As the sixth largest private sector lender, Yes Bank gives access to a large network and deposit base in addition to the all-important banking licence to any entity looking for a foothold in the Indian banking system, the Moneycontrol PRO analysis added.
According to its FY 22-23 annual report, the lender had 7.5 million customers with total assets of Rs 354,786 crore and total advances of Rs 203,269 crore. It had 1,192 branches in 700 plus cities.
In December 2022, Yes Bank announced the completion of the assignment of its non-performing assets totalling Rs 48,000 crore of principal outstanding (adjusted for recoveries since then) as of March 31, 2022, to J.C. Flowers Asset Reconstruction Pvt. Ltd. At the time, it was the single largest transaction of sale of non-performing assets in the Indian banking system.
The lender is a full-service commercial bank providing a range of products, services, and technology-driven digital offerings, catering to retail, MSME, and corporate clients. It operates its investment banking, merchant banking, and brokerage businesses through Yes Securities, a wholly owned unit of the Bank. Headquartered in Mumbai, it has a pan-India presence including presence in GIFT City and a Representative Office in Abu Dhabi.
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