MUMBAI: Yes Bank has said that it has signed a binding agreement with JC Flowers for a strategic partnership in the sale of Rs 48,000 crore of stressed loans of the bank.
The bank’s board approved an enabling resolution for the sale of assets in May. The board credit committee approved the proposal for partnering with JC Flowers on July 13. Reserve Bank of India (RBI) guidelines require that banks adopt a transparent ‘Swiss Challenge’ process for selling bad loans. Yes Bank has invited other potential buyers to better the JC Flowers offer.
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Sources said the distressed assets firm valued Yes Bank’s portfolio at Rs 11,500 crore. It will compensate the bank with a combination of cash and securities receipts. Regulations allow the sale to take place against an upfront payment of 15% and the balance 85% in security receipts, which give the bank a share of the upside on the recovery.
Yes Bank had collapsed under the weight of its bad loans in March 2020, resulting in the lender being placed under a moratorium. Subsequently, the government notified a resolution framework where investors led by State Bank of India infused capital to revive the bank. The bank had legacy bad loans of over Rs 51,000 crore, which it was planning to sell. In recent months, there have been some recoveries. As a result, the loans on sale are valued at Rs 48,000 crore.
Yes Bank’s top defaulters include Anil Ambani’s Reliance Group, Essel Group, Omkar Realtors and Radius Developers (see graphic).
Of the large defaulters, there have already been recoveries in DHFL. CG Power has also been resolved. While the resolution for Jet Airways is complete, there has not been any significant recovery in that account. The IL&FS board has started an interim distribution of the recoveries already made.
JCF invests in financial services sector, taking advantage of regulatory experience across geographies.
Besides JC Flowers, Ceberus Assets Management was competing to partner Yes Bank.
