Yes Bank readies branch expansion blueprint

The one-month old Yes Bank is busy designing an expansion strategy to build its business. The bank is set to roll out its retail operations by January 2005. It plans to have 50 branches by 2006 and 250 in the next five years.

It currently has licences for 12 branches. In the first year of its operations (two quarters ending March 2005), the bank has targeted a deposit base of Rs 1,000 crore and an equally amount of advances. In the first month of its business, it has build a loan portfolio of Rs 200 crore.

To fund its expansions, the bank is looking at raising Rs 300 crore. In the first phase, it will raise Rs 100 crore via a subordinate debt issue by the first quarter of next year.

Says Rana Kapoor, managing director and chief executive officer of Yes Bank, "Since we are relatively new, funds are required to build and expand the business."

Currently the paid-up capital of Yes Bank stands at Rs 200 crore which is expected to go up to Rs 500 crore by 2005. The additional funds of Rs 200 crore will be raised through an initial public offering.

Kapoor along with Ashok Kapur, non-executive chairman holds 52 per cent in the bank. The other shareholders include Rabobank Netherlands (20 per cent), CVC-Citigroup (10 per cent), Russel Asian Infrastructure Fund and ChrysCapital (7.5 per cent each).

"All the shareholders will see a dilution of their holding post the IPO, added Kapoor. The private equity investors have a lock-in-period of 3 years while Rabobank has made a commitment for 5 years.

The bank has a staff strength of about 160 employees which would be increased to 250 by the end of the first quarter of next year.

"We would be rolling out our retail operations in a phased manner. After providing liability products, we would augment our retail portfolio by offering loan products and wealth management among others. Our thrust would be to provide a "banking experience" through direct banking channels, Kapoor added.