SBI plunges up to 11% amid buzz of YES Bank takeover
SBI and LIC are set to pick up 49 per cent stake in the troubled private lender.
By ETMarkets.com | Updated:
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Shares of State Bank of India (SBI) plunged about 11 per cent in the opening tick on Friday amid the buzz that it may acquire controlling stake in YES Bank, along with Life Insurance Corporation (LIC).
As per media reports, SBI and LIC are set to pick up 49 per cent stake in the troubled private lender by acquiring preferential shares in the private lender at Rs 2 per share. ET NOW citing sources reported that the two state-run firms will acquire the stake for Rs 490 crore.
SBI will likely be given exemption from open offer. It should be noted that a similar exemption was given to the lender in the case of Union Bank of India in November, 2019.
Meanwhile, the Reserve Bank of India (RBI) superseded YES Bank’s board and put a cap on cash withdrawal from the bank, saying customers cannot withdraw more than Rs 50,000 over the next one month. This drastic step puts a question mark on the future of the private lender.
This is the first time that the central bank has taken such drastic action with respect to a big bank since July 2004, when the regulator got state-run Oriental Bank of Commerce (OBC) to take over Global Trust Bank to rescue the private-sector lender.
RBI's actions follow the lender’s inability to raise funds that would have helped it provide against loan losses. Prashant Kumar, former deputy managing director at State Bank of India, will be the administrator of Yes Bank, RBI said.
The shares of the lender closed 6.19 per cent lower at Rs 270.45 on BSE.
As per media reports, SBI and LIC are set to pick up 49 per cent stake in the troubled private lender by acquiring preferential shares in the private lender at Rs 2 per share. ET NOW citing sources reported that the two state-run firms will acquire the stake for Rs 490 crore.
SBI will likely be given exemption from open offer. It should be noted that a similar exemption was given to the lender in the case of Union Bank of India in November, 2019.
Meanwhile, the Reserve Bank of India (RBI) superseded YES Bank’s board and put a cap on cash withdrawal from the bank, saying customers cannot withdraw more than Rs 50,000 over the next one month. This drastic step puts a question mark on the future of the private lender.
This is the first time that the central bank has taken such drastic action with respect to a big bank since July 2004, when the regulator got state-run Oriental Bank of Commerce (OBC) to take over Global Trust Bank to rescue the private-sector lender.
RBI's actions follow the lender’s inability to raise funds that would have helped it provide against loan losses. Prashant Kumar, former deputy managing director at State Bank of India, will be the administrator of Yes Bank, RBI said.
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The shares of the lender closed 6.19 per cent lower at Rs 270.45 on BSE.
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