SBI Says YES to Rescue Plan

SATURDAY, 7 MARCH 2020 MUMBAI (CITY) ~10.00 Chg# THE MARKETS ON FRIDAY VOLUME VII NUMBER 32 22 pages in 2 sections Sensex 37,576.6 894.0 Nifty 10,989.5 279.5 WEEKEND SEPARATE SECTION BACK PAGE P14 Nifty futures* 10,939.9 49.6 Dollar ~73.8 ~73.3** Euro ~83.5 ~81.9** AS COVID-19 PANIC LOOMS , GOLD ON COURSE FOR BIGGEST Brent crude ($/bbl)## 46.6## 50.0** Gold (10 gm)### ~44,237.0 ~1,038.0 PERSPECTIVE IN LOW SUPPLY WEEKLY GAIN SINCE JAN 2009 *(March) Discount on Nifty Spot; **Previous close; # Over previous close; ## At 9 pm IST; ### Market rate exclusive of VAT; Source: IBJA PUBLISHED SIMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL), NEW DELHI AND PUNE www.business-standard.com VODA IDEA PUTS AGR DUES AT ~21,000 CR AS READ CALLS ON FM SBI says YES to rescue plan To pick up 49% stake in bank for ~2,450 cr; administrator says working to revive bank ED searches SOMESH JHA/SAMIE MODAK New Delhi/Mumbai, 6 March Rana Kapoor’s tate Bank of India (SBI) will pick up a 49 per cent stake in troubled private lender YES Mumbai house Bank as part of a revival scheme framed by Just a few hours before Vodafone Group CEO S the Reserve Bank of India (RBI) on Friday. SHRIMI CHOUDHARY Nick Read’s meeting with Union Finance The draft scheme, titled “Yes Bank Ltd. New Delhi, 6 March Minister Nirmala Sitharaman and then Telecom Reconstruction Scheme, 2020”, issued by the RBI, Minister Ravi Shankar Prasad on Friday, the mentioned SBI as the “investor bank” and said it The Enforcement Directorate (ED) on Friday con- company announced that it had completed would pay at least ~10 per share for buying equity ducted a search of YES Bank co-founder and former assessing its dues linked to adjusted gross in YES Bank. chief executive officer Rana Kapoor’s South Mumbai revenue (AGR). At ~21,533 crore, Vodafone Idea’s The move will lead to a capital infusion of residence, Samudra Mahal, in connection with the calculation of the AGR liability turned out to be roughly ~2,650 crore by SBI, with equity worth bank's financial dealings with debt-laden Dewan less than half the government estimate. 3 > ~2,450 crore and preferential shares of around Housing Finance (DHFL). This came hours after ~200 crore, an RBI executive said, requesting Finance Minister Nirmala Sitharaman listed “mal- BSNL LOSS WIDENS OVER 2.5 TIMES anonymity. practices” by the bank’s top leadership among the TO ~39,000 CR IN APR-DEC P3 According to the scheme, YES Bank’s autho- reasons for the government’s intervention to restruc- rised capital will stand at ~5,000 crore and ture the management of the private lender. the paid-up capital will be ~4,800 crore. The Confirming the development, an ED official said COMPANIES P3 country’s largest lender will acquire shares at a searches would continue over the weekend and Promoters of IndusInd price not less than ~10 each (face value of ~2 and Kapoor might have to face questioning by sleuths. premium of ~8), according to the scheme made Turn to Page 10 > Bank to raise stake public by the RBI. IndusInd Bank’s promoters will hike their The RBI has invited comments on the draft stake in the private sector lender by buying scheme from members, depositors, or creditors of Account holders gather outside a YES Bank branch RANA KAPOOR extra shares from the market. The promoters YES Bank Ltd and will accept them till March 9. to withdraw money, in Thane on Friday PHOTO:PTI DRAFT SCHEME OF YES BANK CO-FOUNDER of the bank are planning to acquire SBI’s stake, locked in for three years, will “not SPOKE TO THE PRINT additional shares from the open market in reduce its holding below 26% before completion of ty acquiring more than 25 per cent in a listed RECONSTRUCTION BEFORE THE RAID TOOK PLACE India. This will be within the overall three years from the date of infusion of company has to make an open offer to | SBI to infuse ~2,650 crore into YES Bank regulatory cap prescribed for promoter the capital”. ANGRY & acquire another 26 per cent stake from “WHAT CAN I SAY? holding in private banks, the bank said. SBI has asked for a special dispensa- CONFUSED, minority shareholders. (equity worth ~2,450 crore and preferential tion from the Securities and Exchange PEOPLE QUEUE Also, capital infusion has to be done shares of around ~200 crore) I WAS THE FOUNDER OF Board of India (Sebi) for its proposed UP OUTSIDE on the basis of the pricing formula pre- | It shall not reduce its holding below 26% THE BANK. BUT equity infusion in YES Bank. BRANCHES scribed by Sebi. Under this, the acquisi- before completion of three years from the I HAVE HAD ON Sources said SBI Chairman Rajnish tion price has to be either the previous date of capital infusion NOTHING TO Kumar met Sebi chief Ajay Tyagi to PAGE 6 two-week average price or the six-month SATURDAY discuss the issue. At the meeting, the average price, whichever is higher. | RBI to appoint new board of directors; DO WITH IT FOR SPECIALS public sector lender sought exemption SBI had expressed its willingness to make SBI will have two members THE LAST 14 from Sebi’s open offer obligations as well the investment in YES Bank after getting an “in prin- | Employees’ terms and conditions to MONTHS” WEEKEND RUMINATIONS pricing norms. ciple” approval from its board on Thursday. remain same for one year > Fast trains at slow speed 9 Under the Takeover Code regulations, an enti- Turn to Page 10 > The new trains should be fast, but the roll-out of the privatisation plan should be slow and well-considered, writes TN NINAN AT-1 bondholders NATIONAL INTEREST YES crisis, virus fears batter markets Strong leader =/ Strong economy 9 > plan legal action The data and the feel after six years under STOCKS TAKE A HIT Benchmark indices enter correction territory; Nifty HAMSINI KARTHIK PM Modi prove a strong leader doesn’t crashes 2.5%; rupee near 74 against dollar Mumbai, 6 March necessarily give us decisive economic 38,470.6 YES Bank State Bank of in ~ in ~ leadership unmindful of immediate March 5 India SUNDAR SETHURAMAN placed the lender under a moratorium Holders of YES Bank’s additional tier-1 (AT-1) political risks. SHEKHAR GUPTA writes 36.9 Change 288.3 Change Mumbai, 6 March and superseded its board. Market players bonds, amounting to ~10,800 crore, are contemplat- Mar 5 Mar 5 -~20.7 -~17.9 feared the crisis at the bank would spill over ing legal action, with the Reserve Bank of India’s The domestic market slumped on Friday into the economy. (RBI’s) draft reconstruction scheme for the troubled COMPANIES P3 SENSEX -56.0% -6.2% after the crisis at YES Bank triggered a sharp “The RBI’s move to curtail withdrawals lender suggesting a permanent write-down of these Goldman’s Talwar in race INTRA-DAY sell-off in financial stocks. Investor senti- was unexpected. Everyone was aware that bonds outstanding as of March 5. According to the ment was further dampened by the contin- there is some problem, but no one expected draft scheme, the write-down is “in conformity with for HDFC Bank CEO role ued rout in world markets as coronavirus cas- curbs in fund withdrawals, which led to the extant regulations issued by the RBI based on Harit Talwar, the head of the Goldman Sachs es neared 100,000, stoking fresh fears of a unnecessary speculation how the situation the Basel framework”. According to the Basel Group’s consumer-banking business, is in Change global recession. The Sensex dropped 894 would evolve,” said Jyotivardhan Jaipuria, norms, if minimum tier-1 capital falls below 6 per the running for one of India’s top banking 16.2 270.4 points, or 2.32 per cent, to founder of Valentis Advisors. cent, it allows for a write-off of these bonds. Mar 6 Mar 6 jobs. HDFC Bank has held talks with Talwar end at 37,577 — the lowest Most Asian markets fell more than 2 per Classified as a quasi-equity instrument, AT-1 bonds for the top role, according to people with -2.3% 37,576.6 close since October 7. cent on Friday. European markets, too, are intended to provide additional cushion to a knowledge of the matter. The bank has been March 6 The Nifty50 index opened sharply lower as coronavirus weighed bank’s overall capital adequacy. Turn to Page 10 > looking for a new leader to replace Aditya -894 pts plunged 280 points, or 2.5 on various sectors of the economy. US stocks Puri, whose term ends in October. per cent, to close at 10,989, breaching key were volatile on Friday, as jittery investors support levels. Both the indices are now down took cover in perceived safe havens such as 11 per cent from their all-time highs, recorded bonds and gold. The Dow Jones Industrial NIRMALA SITHARAMAN World oil prices fall TOP LOSERS in mid-January. Average was down about 500 points to 25,622 FINANCE MINISTER Mar 06 chg (%)* The rupee fell nearly 0.63 per cent to end as of 12:15 am (IST). “THE RBI HAS BEEN more than 7.5% at 73.78 against the US dollar — the lowest Globally, the number of cases neared Oil prices fell over 7 per cent on Friday on Tata Steel 351.2 -6.5 level for the domestic currency since October 100,000 and the death toll surpassed 3,200.

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