HomeBusinessYes Bank seeks partners for asset recast company

Yes Bank seeks partners for asset recast company

MUMBAI: Yes Bank has invited bids from potential partners for a proposed asset reconstruction company that will undertake recovery of bad loans. Management consultancy firm Ernst & Young is assisting the bank in the process.
In an advertisement on Wednesday, the private bank invited applications from investors with assets under management of at least $5 billion and possessing substantial experience in the distressed asset space. According to bankers, given the $5-billion assets under management eligibility criteria, it will be largely global distressed asset funds that will qualify.
Yes Bank had collapsed under the weight of bad debts in March 2020 and was placed under a moratorium by the RBI. Although Yes Bank was part of a consortium of lenders in most of the default cases, it was the worst hit because its exposure was disproportionate to its size and the bank had a presence in almost every major stressed asset. It was reconstructed through a government-notified scheme with banks led by SBI bringing in significant capital.
Given the complexity of recovering from large defaulters, Yes Bank’s new management had pursued setting up an asset reconstruction company from the time it took over in early April 2020. Addressing analysts in a post-results call last week, the bank’s MD & CEO Prashant Kumar said that it had made a cash recovery of Rs 5,000 crore last year, and the recoveries were much more than the provisions.
“The kind of effort that the engagement with those NPA customers which we have made during the last year — and which continued — I think would give us much better recoveries during the current fiscal year, and our recoveries would also result in significant gain on the P&L and there would not be any need to make any additional provision for this,” said Kumar.
The bank had total gross non-performing exposures of Rs 38,821 crore at the end of June 2021 as against Rs 39,034 crore in the previous quarter. “On the recovery side, our specialised stressed asset management team of about 100 professionals have demonstrated a significant track record of cash recoveries. He added that the team is divided into two parts — core resolution & recovery team, and support function. “We expect to have cash recoveries of Rs 5,000 crore in the current financial year,” said Kumar.

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