YES Bank stock slide, promoters seek intervention from Sebi and RBI

Shareholders say negative messages being circulated by short-sellers

The YES Bank promoters have sought an intervention from the Securities and Exchange Board of India (Sebi), and the Reserve Bank of India (RBI), alleging “heightened speculation and short-selling in the YES Bank scrip”.

Key shareholders YES Capital and Morgan Credits — which is owned by Rana Kapoor’s family — have written to the heads of the capital markets and banking regulators, asking them to launch an investigation into the trading pattern of Yes Bank.

The sharp slide in the stock is a burning issue for the promoters, who have pledged a large part of their shareholding. Earlier this week, there were reports of Reliance Mutual Fund, with whom the promoters have pledged shares, having asked Yes Bank promoters to provide for more collateral.

“We continue to witness unabated speculation regarding the Yes Bank stock, particularly by short-sellers, who appear to be speculating on the back of unpublished information led by countless negative messages on WhatsApp and chat groups, on a public trust banking institution. We request you to investigate this highly serious matter,” the promoters wrote in the letter — addressed to Sebi Chariman Ajay Tyagi and RBI Governor Shaktikanta Das.

According to the BSE, shares worth Rs 1,270 crore held by YES Bank’s promoters have been pledged. This is the second letter written by Yes Capital and Morgan Credits. 

On August 21, the two promoters had raised the same issue with the stock exchanges and Sebi’s investigation department. People in the know said the stock exchanges have already launched an investigation into the trading pattern in YES Bank shares. 

“We will soon share the findings of our investigation with Sebi,” said an exchange official.

Shares of YES Bank have been highly volatile this year. The stock — part of the benchmark Nifty — has gained or lost more than 3 per cent during 69 out of the 173 trading sessions in CY2019. Market experts said the heightened volatility in the stock was triggered by consistent news flow in the counter. 

In recent weeks, there has been spate in reports of the founders entering talks with Paytm founder Vijay Shekhar Sharma to sell their stake. Experts said Sebi typically initiates an investigation into stocks that see unusual or sharp moments on a suo motu basis. 

“Sebi looks into any manipulation on its own, without anyone prompting it. The regulator has a robust surveillance system to take address such issues,” said J N Gupta, former executive director of Sebi. 

The Yes Bank stock has lost nearly 80 per cent of its value in the past one year. The private lender has seen erosion in market capitalisation of over Rs 57,000 crore during this period. This erosion has hurt Yes Bank’s plans to raise $1 billion. 

In August, the lender managed to raise just over Rs 1,900 crore ($270 million) by issuing shares to institutional investors through a qualified institutional placement (QIP), and had decided to raise more at a later date. 

The private bank issued close to 232 million fresh equity shares, under the QIP, at Rs 83.6 apiece. Shares of Yes Bank closed at Rs 68.6 apiece on the BSE on Friday.