Yes Bank to conduct Swiss Challenge auctions for Rs 48,000 crore stressed assets
Yes Bank proposes to run a transparent bidding process on Swiss Challenge basis for sale of the identified stressed assets portfolio of the bank aggregating up to Rs 48,000 crore using the JC Flowers ARC’s bid as the base bid.
The board of Yes Bank on 6 May 2022 approved signing of a binding term sheet with JCF ARC LLC and JC Flowers Asset Reconstruction Private Limited (JC Flowers ARC) for strategic partnership in relation to sale of identified stressed loans of the Bank. Further to above and having subsequently fulfilled the requisite pre-conditions, the said term sheet has now become effective as on July 15, 2022.
Accordingly, the Bank has decided that the JC Flowers ARC will be base bidder for a proposed sale of an identified stressed loan portfolio of the Bank aggregating to up to Rs. 48,000 Crores.
The proposed bidding will be in accordance with the guidelines issued by the Reserve Bank of India.
Yes Bank has total stressed assets of Rs 69,500 crore at the end of March 2022. The Stressed Asset Management team of Yes Bank has been instrumental in achieving cash recoveries and upgrades amounting to Rs 7,290 crore in FY 2021-22, which is on the back of Rs 5,782 crore in FY2020-21. During 2021–22, the stressed asset management team of the bank was extensively involved in negotiating with global distressed debt funds to find a suitable partner for the Bank’s ARCs.
For 2022-23, the bank has a target of Recoveries and Upgrades of Rs 5,000 crore.
The bank’s stressed assets management team employs multi-pronged resolution strategies, including operational and financial restructuring, identifying strategic investors for the takeover of stressed assets, resolving issues through the insolvency and bankruptcy framework, negotiating with borrowers for one-time settlements, recovering security interest by enforcing the Securitisation Act and selling non-performing assets (NPAs) to asset reconstruction companies (ARCs) or other investors to optimise recovery outcomes (both in terms of recovery value, as well as timelines for recovery).
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