Mr. Ravneet Gill has recently joined Yes Bank on 1st March, 2019 as MD and CEO for a tenure of 3 years. However, it was rumored that the things are not going on the right track for Yes Bank, apart from already existing regulatory and corporate governance issue, the matter got even more complicated when the two of the board members resigned suddenly.

Mr. Ravneet Gill in his recent interview with the Leading News Paper ET, tried to calm down the rumors and current speculations.

The synopsis of the interview of Mr. Ravneet Gill  is being provided hereunder –

  • There was a rumor in the market that the two board members suddenly resigned was due to non-acceptance of certain things which they knew –

Clarification by Mr. Ravneet Gill –

Mr. Ravneet Gill clearing the rumor said that the two resignation that happened were both regretted resignations. Both the directors resigned because of their personal reasons. Mr. Gill also clarified that it was just a coincidence that both the directors resigned on the same time.

Going further, Mr. Gill assured to the market, shareholders and investors that the board is completely united.

  • Gandhi, the former deputy governor, is now on the board which clearly indicates that he is very well aware about the things happening in the bank, which is very important.

Clarification by Mr. Ravneet Gill –

Mr. Gill said that one should fully appreciate the importance of having a RBI appointed additional director on the aboard of Yes Bank and it should give market a lot of confidence towards Yes Bank. Mr. Gill clarified that if there was something in Yes Bank that was happening wrong, then that gets addressed by the presence of the additional director appointed by the Reserve Bank of India.

Mr. Gill said that Mr. Gandhi in person attended the recent board meeting, wherein, he observed the way the business gets transacted.

  • Recently Annual General Meeting (AGM) of the Yes Bank was held wherein various points were discussed.

With regard to AGM, Mr. Gill said that it was his first AGM, however, some of the other board members appreciated that the AGM was conducted very well. During the AGM, as Mr. Gill said, there was a talk about the fact that these are difficult time for financial services. Mr. Gill said that the way resolutions were passed it showed that shareholders are strongly standing behind the bank.

Mr. Gill said that during the AGM there were concerns with regard to the share price having come off, however, the investors and shareholders equally felt confident that the bank would rebound very quickly.

  • Credit guidance showed a slippage of 200 to 250 bps and the UBS report says that there is going to be a significantly higher slippage of 125 to 150 bps.

Clarification by Mr. Ranveer Gill –

Mr. Gill disappointedly stated that he do not know where this comes from. He stated that some discussion should have happened with the management before numbers like these get put out.

He added that when the fourth quarter results were out they had clearly stated that for the current year, the credit cost guidance was going to be 205 bps out of which 80 bps was subsumed in the quarter four by way of the contingency provisions. For the remainder of the year, the credit cost guidance was 125 bps.

  • There is a slowdown in terms of demand, in terms of high frequency data points, the liquidity in the systems and the macro have also not improved.

Clarification by Mr. Ranveer Gill –

Mr. Gill said that these were just a few concentrated names which were experiencing illiquidity at that point of time. He said if he look at it from that standpoint, in each of these names Yes Bank had a progress since the time they had the year end results in terms of assets sales, change in share holding and in some cases change of control.

  • Current borrowers like Dewan Housing, ADA Group of Companies, Essel Group of Companies are on the course to not default and would repay their obligations.

Clarification by Mr. Ranveer Gill –

Mr. Gill said that I have clearly stated that there is a progress in terms of stake sale or in terms of change in shareholdings, change in ownership in this very portfolio, however, he said that it would not be right to get into specifics with regard to any of these names.

Mr. Gill further added that from the time they have provided a credit cost guidance, there has actually been very tangible progress in the entire sub investment book.

  • The whole watch list was not received well by the market

Clarification by Mr. Ranveer Gill –

Mr. Gill said that it was not a mistake. He said that market had seen this happen in the case of two other banks wherein the watch list was provided and then the watch list continued to grow over subsequent quarters. He said do remember that in those cases what happened was a certain cyclical blind that they got into which was cement, steel, power and which given the fact that it was cyclical and had to do with sectors, unless those sectors came out of trouble, the portfolio could not remedied.

Mr. Gill said that for Yes Bank it is not a question of a cyclicality, it is not a question of being caught in a particular sector or an industry. He said that this is just a bunch of names which have all at the same time experienced a little bit of illiquidity, subsequent to the events that happened in September and to that extent, coming out of that does not have to be protracted.

Mr. Gill said that Yes Bank is not dependent on the external factors either in terms of regulation, or industry dynamics for us to be able to come out of that. He said that the market has taken that with a pinch of salt only because of the reason that they have seen it happening with other banks.

  • The rating agencies are indicating that the rating of Yes Bank could be review because they think that there could be an issue with asset liability and also in terms of some of the loan repayments.

Clarification by Mr. Ranveer Gill –

Mr. Gill clarified that when some of the rating agencies spoke with them, one of the concerns that they expressed was about the NBFC sectors. However, Mr. Gill stated that there have been certain NBFCs that have got downgraded and when the NBFCs got downgraded there would obviously be concern with respect to what could happen.

Mr. Gill stated that there was some concern over how that sector pans out vis-à-vis us and the second concern was the timing of the capital rise. Mr. Gill clarified that the reason it has been put on review is that they would like to see some resolution happen on both these fronts. He stated that if the concerns were more fundamental, the consequences could have been more severe.

  • What will happen to the growth of Yes Bank when there is a slowdown in the industry and the capital is not freely available to the Bank?

Clarification by Mr. Ranveer Gill –

Mr. Gill said that they are making sure that there is enough portfolio intensity and that Yes Bank would continue to grow and would able to generate revenue. He added that once the capital comes in, growth will go up.

  • Difference in second half from the first half –

Clarification by Mr. Ranveer Gill –

Mr. Gill stated that the second half will be more focused on growth. He stated that as we moved into the year end, there was a period of consolidation, controls, governance looking at risk management etc. But once the capital comes in, the focus will go straight back into being very growth oriented. He stated that the prospects for the rest of the year should be very strong.

  • Year 2019 and 2020 would be year of repair for Yes Bank and year 2021 will be a year of comeback –

Clarification by Mr. Ranveer Gill –

Mr. Gill confidently stated that they don’t think there is a comeback that is needed since they didn’t go anywhere. Mr. Gill further stated that from the point of view of repair and growth, these are the levels which the management needs to be able to operate simultaneously. Mr. Gill clarified that this year we will use both these levels and from the next year onwards, it will just be purely growth oriented.

  • Earlier Yes Bank management was investing in lot of non-banking areas and were generating lot of fee based income. Is there a view that the new management wants to slow down some of the non-banking businesses?

Mr. Ranveer Gill mentioned that the fee base income actually comes from the banking business. He stated that the fee base income whether from a structure finance business, whether from a transaction bank, whether it was a retail bank, whether it was a financial market, it was coming mainly from those which are core banking business for Yes Bank and that does not change.

Mr. Gill clarified that they still continue to remain very focused on that and if there is anything different, it is just that they are thinking how to accelerate the other components of the business which are generating relatively smaller, so that they can make more meaningful contributors to the overall fee pot.

  • Explaining the personal view on the taking up of the repairing of Yes Bank, Mr. Gill stated that banking is a long term process. One cannot put banking in terms of weeks and quarters. It is a long term business, wherein, you continue to grow, learn and evolve. He stated that it is a period of transition for Yes Bank and having spent months, he is optimistic about the future of the Yes Bank and he stated that the vibes that he picks from the employees, clients, shareholders and the board just tend to revalidate that perception.

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November 2020