YES Bank gains 6% ahead of board meeting today

Shares of YES Bank were up 6% at Rs 239 per share on the BSE in intra-day trade on Tuesday ahead of the board meeting to be held later in the day to decide the future course of action after the Reserve Bank of India (RBI) curtailed the term of its managing director (MD) and Chief Executive Officer (CEO) Rana Kapoor and asked the bank to look for a replacement by January 2019.
“Reserve Bank of India has vide letter dated September 17, 2018, intimated that Rana Kapoor may continue as the managing director (MD) & CEO till 31 January 2019, and the board of directors of the Bank are scheduled to meet on September 25, 2018 to decide on the future course of action,” YES Bank said on Wednesday, September 19, 2018, in a regulatory filing.

After the announcements, the stock of YES Bank had slipped 29% in past two trading days till Monday. It touched a 52-week low of Rs 210 on Friday in intra-day trade.

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YES Bank gets a ratings cut after RBI order on Rana Kapoor

Brokerages including Citigroup and IDFC Securities have slashed their ratings on YES Bank, citing weak business outlook. This follows the Reserve Bank of India’s direction to CEO Rana Kapoor to step down after January 31, rejecting the lender’s request to extend his tenure by three years.

Kapoor’s departure might make raising fresh capital, as well as growing deposits and fee income, harder for the Mumbai-based lender, the brokerages said.

Citigroup, in a note, said the premium attached to YES Bank’s shares for Kapoor “can go away”. The bank’s senior management is competent, but Kapoor played a significant role in building the bank, it added. The note added that YES Bank might have to defer its capital raising plans, which could slow down growth. The brokerage downgraded the stock to ‘sell’ from ‘buy’. It cut its price target by 39 per cent to Rs 270.
Domestic brokerage IDFC said in a note that Kapoor’s departure will lead to a slowdown in loan and fee growth, which could “lead to a sharp fall in valuations”.

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