Yes Bank Ltd. has concluded the transfer of the identified stressed loan portfolio to Asset Reconstruction Company JC Flowers, the lender wrote in its exchange filing on Saturday.

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The transfer of the bad loans has been done under the 15:85 structure after adjusting for recoveries between April 1 to November 30 this year.

A 15:85 structure entails that the bank gets 15 percent of loan value upfront from the ARC, while the remaining 85 percent is in the form of security receipts.

The lender had identified a stress pool of Rs 48,000 crore as of March 31, 2022, post which it made some recoveries. The net of those recoveries has been transferred to the ARC.

Back in July, Yes Bank had selected JC Flowers ARC as a partner to form an asset reconstruction company (ARC) to sell bad loans of the bank valued at Rs 48,000 crore.

The lender signed a binding term sheet with JCF ARC LLC and JC Flowers Asset Reconstruction Pvt Ltd (JF Flowers ARC) for strategic partnership in relation to the sale of identified stressed loans of the bank.

As per Reserve Bank of India guidelines, Yes Bank said it proposes to run a transparent bidding process on a Swiss Challenge basis for the sale of the such portfolio using JC Flowers ARC's bid as the base bid.

JC Flowers has promised to pay the bank Rs 11,183 crore for the entire pool of the stressed loans, which assures a 23 percent recovery to the bank.

Yes Bank CEO Prashant Kumar has mentioned in the past that the transfer of the bad loans will result in a significant reduction in the bank's gross NPA ratio to under two percent from the current 12.89 percent. Net NPA ratio would be at one percent post the transfer.

Yes Bank has been in focus recently since the Reserve Bank of India conditionally approved the sale of securities worth nearly Rs 9,000 crore to global PE players Carlyle and Advent groups.

CA Basque Investments, a part of the Carlyle Group, and Verventa Holdings, an affiliate of funds managed by Advent, will be offered a little over 184.80 crore shares of Yes Bank each at a price of Rs 13.78 apiece. Likewise, they will get more than 128.37 crore warrants each at a price of Rs 14.82.

Shares of Yes Bank had risen 35 percent in the four trading sessions between December 8 to December 13. Morgan Stanley then initiated coverage on Yes Bank with an underweight rating, saying that all better prospects for the lender are already priced in. The note sparked a correction in the stock on Wednesday, during which it ended 7.7 percent lower. Shares shed another 5.6 percent on Friday.

First Published:Dec 17, 2022 11:40 AM IST