Yes Bank transfers bad loans worth $5.81 bn to JC Flowers

Bengaluru, December 19

Private sector lender Yes Bank on Monday said it has completed the transfer of bad loans worth $5.81 billion to private equity firm J.C. Flowers, in a deal aimed at cleaning up its balance sheet.

The deal, the largest sale of bad loans in the Indian banking sector yet, comes more than two years after the central bank stepped in to take control of the lender after a dramatic rise in toxic assets alarmed investors and depositors.

Largest sale of NPAs in India

• This is the largest sale of bad loans in the Indian banking sector as of now
• It comes more than two years after the central bank stepped in to take control of Yes Bank after a dramatic rise in toxic assets alarmed investors and depositors
• The lender’s stock has shown signs of a recovery after being driven down sharply over the past two years

The lender’s stock has shown signs of a recovery after being driven down sharply over the past two years, although it remains a fraction of its 2018 peak of Rs 404. It is up about 56% so far this year, last trading at Rs 21.4.

“This transaction would further strengthen our balance sheet, allowing the bank to focus fully on growth and profitability as future strategic objectives,” Yes Bank chief executive Prashant Kumar said.

Yes Bank’s gross bad loan ratio edged down to 12.89% at the end of the September quarter from 13.45% at the end of June. The number had risen to 18.87% as of December 2019.

Last week, Yes Bank also concluded allotting shares and share warrants worth $1.1 billion to private equity firms Carlyle and Advent International, in its bid to boost its capital and fund growth. — Reuters