Round-up of Saudi princes, bizmen widens; travel curbs imposed

New Delhi, Mar 6: Shares of YES Bank and State Bank of India came under huge selling pressure on Friday as developments unfolded regarding SBI picking stake in the private lender. Shares of the lender hit record low of Rs 5.55, plunging 85 per cent, and were trading below its previous low of Rs 8.16 hit on March 9, 2009.

SBI, on the other hand, slumped 11 per cent to Rs 257.35 on the BSE. The benchmark S&P BSE Sensex was trading with a cut of over 3 per cent at 37,251.37 level.

In the past three months, share price of the private lender has plunged 41 per cent, while the state-owned lender has slipped 14 per cent. In comparison, the S&P BSE Sensex has dipped 5.6 per cent till Thursday.

On Thursday, the Reserve Bank of India superseded the board of troubled private sector lender YES Bank and imposed a 30-day moratorium on it “in the absence of a credible revival plan” amid a “serious deterioration” in its financial health.

During the moratorium, which came into effect from 6 pm on Thursday, YES Bank will not be allowed to grant or renew any loans, and “incur any liability”, except for payment towards employees’ salaries, rent, taxes and legal expenses, among others.

This is the first time that a bank of this size will be put under a moratorium by the RBI.

“The financial position of YES Bank had undergone a steady decline “largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits,” RBI said in a statement.

“After the moratorium, the next step will be to infuse to money and keep the bank afloat. So from shareholders’ point of view, the future is certainly hazy as the capital requirement is huge. The good part, however, is that the RBI has stepped in and depositors don't have to worry,” says Siddharth Purohit, a research analyst at SMC Securities.

Meanwhile, analysts at Nomura believe that placing the Bank under moratorium implies that equity value in the bank would be negligible, and that the chances of private capital participating in future capital raising plan are near zero.

"Any resolution for Yes Bank is more proposed from the perspective of deposit holders and systemic stability, and not from the perspective of Yes Bank equity investors or even perpetual bond holders," they wrote in a note dated March 6.

In another development, SBI’s Board Thursday gave in-principle approval to consider an “investment opportunity” in YES Bank, even as it said “no decision had yet been taken to pick up stake in the bank”.

According to a  report, highly-placed sources indicated a rescue plan involving SBI and Life Insurance Corporation of India (LIC) was being discussed and an announcement in this regard might be made soon.

“While the finer details of the deal are being worked out, it is anticipated that both SBI and LIC together will take a 51 per cent stake in the bank, with a one-year lock-in period,” the report said.

Most analysts believe it is a positive step for the Indian financial sector as the government has tried to avoid a repeat of IL&FS-like crisis.

“The move is a positive step for the financial sector as a whole. By this, the government has tried to avoid a repeat of IL&FS-like crisis and has saved the depositors,” said AK Prabhakar, Head of Research at IDBI Capital. While we know that YES Bank has a huge pile of bad loans, SBI is the only bank that has the capacity to absorb it, he added.

However, the valuation at which YES bank would be taken over remains a cause of concern.

Global brokerage firm JP Morgan Thursday cut its target price for YES Bank on Thursday to Rs 1 per share, taking into account the potential fall in the lender’s net worth due to stressed assets.

“We believe forced bailout investors will likely want the bank to be acquired at near-zero value to account for risks associated with the stress book and likely loss of deposits. We think the bank will need to be recapitalised at nominal equity value and could test dilution of additional tier 1 (AT1) capital. We remain underweight and cut our target price to Rs 1 as we believe net worth is largely impaired,” JP Morgan said in a note.

Global brokerage firm Nomura estimates a need of Rs 25,000-44,000 crore and adjusted for Rs 7,400 crore of current coverage, if the current stress of Rs 65,000-70,000 crore faces 70 per cent loss given default (LGD).

"It implies Rs 18,000-37,000 crore needed for provisioning against the current net worth of Rs 25,700 crore Also, to run as going concern, the bank would require over Rs 20,000 crore of CET-1 capital as well," the note said.

YES Bank has registered slippages of Rs 12,000 crore so far in FY20, while it has placed Rs 30,000 crore of loan assets under the watch list. Its deposits stood at Rs 2.09 trillion on September 30, 2019, while its advances totalled Rs 2.24 trillion. The bank has delayed publishing its December quarter results by a month to March 14.

Riyadh, Jul 16: Prince Abdul Aziz bin Saud bin Naif, minister of interior and chairman of the Hajj Supreme Committee, chaired a virtual meeting on Wednesday with the heads of  security agencies and officials in charge of this year’s Hajj season.

During the meeting, the minister and security officials discussed organizational issues related to Hajj, including preventive and precautionary steps related to fighting the coronavirus disease, procedures related to pilgrims commuting to the holy sites, and mechanisms to facilitate performing the Hajj rituals.

Prince Abdul Aziz confirmed abiding by the directives of King Salman and Crown Prince Mohammed bin Salman to take all precautions to preserve the safety of the pilgrims, and facilitate their performance of their Hajj rituals, according to the highest health standards to contain the new coronavirus pandemic.

Saudi Arabia has decided to allow only a limited number of domestic pilgrims to perform Hajj this year in the wake of the COVID-19 outbreak.

Only those expatriates between the ages of 20 and 50 who are not suffering from any chronic diseases can apply for the pilgrimage.

Earlier, the Ministry of Hajj and Umrah said that requests from people of 160 nationalities in the Kingdom have been screened electronically to select who will perform Hajj this year.

Of the pilgrims who will receive approval, 70 percent will be non-Saudis residing in the Kingdom and the remaining 30 percent will be Saudi citizens.

Meanwhile, the Ministry of Interior said that anyone found entering the sites of Hajj (Mina, Muzdalifah and Arafat) without a permit from July 18 till the end of Dhu Al-Hijjah 12 will be issued with a fine of SR10,000 ($2,600).

The fine will be doubled if the offence is repeated. Security personnel will be posted on roads leading to the holy sites to ensure that anyone who breaks the law will be stopped and fined.

Around 2.5 million foreign and domestic pilgrims performed Hajj last year.

Dubai, Apr 14: Saudi Arabia reported 435 new cases of coronavirus, bringing the total number of infections in the country to 5369, the Ministry of Health announced on Tuesday.

According to the ministry of health the number of recoveries today are 84 cases, making total of recoveries in the kingdom 889.

The ministry also confirmed 8 deaths bringing the total number of deaths in the kingdom to 73.

Saudi Arabia imposed a 24-hour curfew and lockdown on the cities of Riyadh, Tabuk, Dammam, Dhahran and Hofuf and throughout the governorates of Jeddah, Taif, Qatif and Khobar. This week the curfew was extended until further notice.

Containment efforts
Saudi authorities are racing to contain an outbreak of coronavirus in the Islamic holy city of Mecca.

The total number of coronavirus cases reported in Mecca, home to 2 million people, reached 1,050 on Monday compared to 1,422 in the capital of Riyadh, a city more than three times the size. Mecca’s large number of undocumented immigrants and cramped housing for migrant workers have made it more difficult to slow the infection rate.

Saudi Arabia has reported one of the lowest rates of infection in the region, with around 5,000 cases in a population of over 30 million.