HSBC arm raises stake in Yes Bank by 4%

MUMBAI: HSBC'S financial investment arm, HSBC Financial Services (Middle East), has hiked its stake in YES Bank to 4.88%. Prior to this, the HSBC arm held a 0.89% stake in the private sector bank.

YES Bank's MD & CEO, Rana Kapoor, told ET: "This is through a secondary market transaction. HSBC Financial Services (Middle East) has been buying YES Bank shares since the third week of January 2008. Till last week, the total number of shares purchased stood at 14.48 million shares, while the stake rose to 4.88%."

However, HSBC's official spokesperson said, "We cannot comment on this transaction. There are several entities in which HSBC has invested. It could be for proprietary purposes or even on behalf of a client."
December 2007, Orient Global, a Singapore-based financial institution led by Richard Chandler, picked up a 4.99% stake in Yes Bank for Rs 331 crore. YES Bank plans to raise up to Rs 1,100 crore in 2008-09, through a combination of debt and equity.

The HSBC group had also attempted to pick up a strategic stake in Axis Bank (the erstwhile UTI Bank). However, the group was forced to dilute its holding as it did not receive permission from RBI to hold a higher stake. The group now holds 4.96% in Axis Bank.

YES Bank will look at raising anywhere between $150 million and $170 million through a qualified institutional or private placement between April and June. The balance amount will be raised through multiple tranches in the debt market by September.

Under the equity issue, the bank will issue 20 million fresh shares to the new investors, thus diluting the promoters' stake further by 6.3%.

The current meltdown in the equity markets has also affected YES Bank's share price. On March 18, 2008, the bank's stock on the BSE reached a 52-week low of Rs 120.5, whereas in January 2008, the stock was quoting at a high of Rs 277.80. On Tuesday, the bank's share rose sharply to close at Rs 172.05.

Incidentally, the bank has advanced the date for announcing its annual results from April 29 to April 9. This is because most potential investors would want to consider audited financial results before negotiations commence.

Mr Kapoor had indicated that the funds raised will be used to set up new branches, as the bank is targetting 250 branches by 2010. It will also help the bank raise the exposure limits both for single and group borrowers, he added. The bank will raise another Rs 500 crore through a Tier-II debt issuance (both lower and upper tier-II).

The bank has a capital adequacy ratio of 14.5% as on December 2007. YES Bank posted a 116% jump in net profit at Rs 54.2 crore for the December quarter, as against Rs 25.1 crore in the corresponding period last year.