Yes Bank sells bad debts of Rs 48,000 crore for Rs 11,500 crore

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MUMBAI: Yes Bank said it had signed a binding agreement with JC Flowers for a strategic partnership in the sale of Rs 48,000 crore of stressed loans from the bank.
The bank’s board approved an enabling resolution for the sale of assets in May. The Board of Directors’ Credit Committee approved the proposed partnership with JC Flowers on July 13. Reserve Bank of India (RBI) guidelines require banks to adopt a transparent “Swiss Challenge” process for the sale of bad debts. Yes Bank invited other potential buyers to improve JC Flowers’ offer.

Sources said the troubled asset firm valued Yes Bank’s portfolio at Rs 11,500 crore. He will compensate the bank with a combination of cash and securities receipts. The regulations allow the sale to take place against an initial payment of 15% and the balance of 85% in security receipts, giving the bank a share of the upside recovery.
Yes Bank had collapsed under the weight of its bad debts in March 2020, leading to the placement of the lender under moratorium. Subsequently, the government notified a resolution framework where investors led by National Bank of India capital infused to revive the bank. The bank had inherited bad debts of more than Rs 51,000 crore, which it planned to sell. In recent months, there have been a few revivals. Accordingly, the loans for sale are valued at Rs 48,000 crore.
Major Yes Bank defaulters include Anil Ambani Trust groupEssel Group, Omkar Realtors and Radius Developers (see chart).
Among the big defaulters, there have already been recoveries in DHFL. CG Power has also been resolved. Although the Jet Airways resolution has been completed, there has been no significant recovery on this account. The IL&FS Board of Directors has begun an interim distribution of recoveries already made.
JCF invests in the financial services sector, leveraging regulatory experience across all geographies.
Besides JC Flowers, Ceberus Assets Management was competing to partner with Yes Bank.

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