Has Yes Bank just restored investors faith? Check its Rana Kapoor comment, share price movement
Today, was a good day for Yes Bank as it received positive reaction from investors becoming top performer, despite the benchmark indices trading in negative.
Today on Dalal Street, Yes Bank, which is surrounded by controversy over CEO & MD Rana Kapoor exit, saw its share price soar over 6% on Sensex and thereby went a long way in restoring investors' faith. Within minutes of trading session opening, Yes Bank touched an intraday high of Rs 195.30 per piece above 6.45% on BSE. However, at around 09:57 hours, the bank was trading at Rs 192.50 per piece up by Rs 9.50 or 4.93%. Past few days have been very difficult for Yes Bank as RBI has asked it to appoint a new CEO & MD after it cut Rana Kapoor’s tenure - he is to exit by January 2019. This was taken negatively by investors, which is why, its share price has dropped by nearly 73% in last 7 days of trading.
However, today, was a good day for Yes Bank as it received positive reaction from investors becoming top performer, despite the benchmark indices trading in negative.
The reason behind the performance would be restoration of the bank’s growth outlook that it made on exchanges today, and also fully committed in bringing a new CEO under RBI's specified time.
Talking about setting up a committee for Kapoor’s successor, Yes Bank said, “'Search & Selection Committee', assisted by a Global Leadership Advisory Firm, will evaluate both internal and external candidates and make suitable recommendations to the Board of Directors for onward submission to RBI.”
Yes Bank said, “The 'Search & Selection Committee' and the Board of Directors are fully committed to expeditiously completing the said process within the current stipulated timelines of RBI.”
The two external experts of the 'Search & Selection Committee' will be finalized by October 7, 2018.
This comes as a good news for investors, as Yes Bank shrugs off challenges in finding a new CEO & MD.
Last week, Yes Bank had said, “The board also decided that given the role of Rana Kapoor as MD&CEO since inception of the bank in 2004, and the time consuming challenges of finding a suitable successor, that the incumbent MD&CEO be given further time in his current position beyond January 31, 2019.”
In the notification, Yes Bank also said, “Over the past few days, some unfounded speculations regarding the Bank's Asset Quality have been brought to its notice.”
It added, “ In this context, Management clarifies that the Asset Quality continues to be stable as stated in point 3. a. iii. above and reiterates its credit cost guidance t 50-70 bps for FY19 (76 bps for FY18).”
However, looks like Yes Bank has decided to follow what RBI has asked and a new CEO can be expected in coming months before the specified timeline of the central bank.
The rise in Yes Bank was also despite a rating agency CARE Rating putting their debt instruments on 'credit watch with developing implications' on account of the recent communication from the Reserve Bank of India (RBI) restricting the tenure of the current Managing Director and Chief Executive Officer (MD & CEO) Mr. Rana Kapoor, till January 31, 2019.