NEW Delhi, NOV 18 :
‘Recent developments could limit bank from raising capital’
Ratings agency ICRA has placed the long-term ratings for Yes Bank on rating watch with negative implications, and believes the ‘recent developments’ could limit the lender’s capacity to raise capital in the near term.
The placement “considers the recent developments which leads ICRA to believe that Yes Bank’s ability to raise capital may be constrained in the near term,” ICRA said.
After the RBI refused to extend Yes Bank MD & CEO Rana Kapoor’s tenure beyond January 31, the lender is now looking for a successor. Its shares have tanked 45% since the issue of the extension came to light in late August.
ICRA said the rating may be downgraded if the risk-based supervision exercise of RBI for FY2018 results has any material adverse impact on asset quality parameters of the bank. “Further stability in the deposit base will remain a key monitorable.”
The rating may be removed from ‘watch’ if the bank is able to maintain asset quality despite RBS outcomes, ensure continued stability in depositor base, and able to improve capital buffers. ICRA added that the bank’s credit strengths are partially offset by its relatively high, though steadily declining, share of corporate deposit funding, relatively high exposure to the corporate sector, and relatively high capital consumption rate due to robust growth, leading to weakening of capital cushion.
