This week once again saw the Yes Bank shares very volatile, with Moody's placing the bank's rating under review. A week does not pass-by, without constant news and speculations about Yes Bank.
Quarterly numbers eagerly awaited
The quarterly numbers of the bank are eagerly awaited. Many institutional investors have exited the stock and the bank has now solid holdings from retailers. Most of these investors want to await for the numbers of Yes Bank and some information on the bank's fund raising plan.
It's highly likely that non performing assets of the bank would rise and provisions increase this quarter. For the bank to really survive it needs two things at the moment: a large-scale capital infusion or a takeover from a larger bank.
Capital raising which has been eagerly awaited by the bank for so long now, is just not happening. The sought of marquee investors that the bank is looking is not falling in place.
The kind of investors who are willing to pump money in the bank are not a marquee set of investors. The bank has already declined one proposal. Yes Bank is looking to raise about Rs 10,000 crores and this too may not be sufficient say analyst. In fact, slippages from the corporate loan book are only set to rise and the Rs 10,000 crores may not be adequate.
Unless there is some swift resolution on that front, its going to be very difficult for the bank. The next best option would be a takeover of the bank by a larger bank. The options here are very few including the likes of HDFC Bank, SBI and Axis Bank. We have seen strong banks taking over the weaker banks in the past and this is not the first time this would happen.