State Bank of India (SBI) is unlikely to take a call on selling its stake in Yes Bank this financial year, as the “markets are not very encouraging right now”. SBI, the country’s largest lender that is owned by the government, currently holds a 26 per cent stake in YES Bank, according to a report.
SBI had to draw up plans for its holding in Yes Bank with the lock-in period expiring at the end of the current financial year. “With this kind of market, it is not the time for listing subsidiaries. If markets are like this the whole of the current year, we are unlikely to take the subsidiaries public. We will have to wait and watch for the right time. The subsidiaries are well-capitalised and can support growth ambitions,” according to a Time of India report quoting SBI Chairman Dinesh Khara.
SBI last year planned to sell part of its stake in SBI Funds Management through an initial public offering (IPO) during the current financial year 2022-23. It was also looking at listing its non-life arm SBI General Insurance. The report also said a listing of SBI subsidiaries will forth the true valuation of the lender. Currently, SBI has a market cap of Rs 4.3 lakh. SBI Life has a market cap of Rs 1.2 lakh crore.
The RBI in March 2020 superseded Yes Bank’s board and capped the withdrawals to Rs 50,000. It also asked State Bank of India (SBI) to get a 49 per cent stake in the bank for restructuring it. the RBI also appointed Prashant Kumar, a former senior executive at SBI, as an administrator at YES Bank. He later became the bank’s CEO on March 6, 2020.
As per the restructuring plan, SBI was not allowed to reduce its stake in the bank to below 26 per cent for three years. Other investors and existing shareholders had a lock-in period of three years for 75 per cent of their investment in Yes Bank. However, the lock-in period was not apply to shareholders with less than 100 shares.
“It (the RBI) had no alternative but to apply to the central government for imposing a moratorium under section 45 of the Banking Regulation Act, 1949. Accordingly, the central government has imposed moratorium effective from today,” the Reserve Bank of India had said in a statement.
The SBI has appointed JCF ARC LLC and JC Flowers Asset Reconstruction Private Limited (JC Flowers ARC) to help it sell the bad loans at YES Bank.