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On Thursday, the Reserve Bank of India superseded the board of troubled private sector lender YES Bank and imposed a 30-day moratorium on it “in the absence of a credible revival plan” amid a “serious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

Dubai: There aren’t that many job vacancies right now – but be prepared for a 15-20 per cent cut in salary expectations even for those positions that are still open. Businesses in the UAE are definitely not in a generous mood when it comes to hiring, with salary cuts now part of the new normal.

And they are definitely not willing to take on new hires without extracting some cost benefit from them. “We have seen major [salary] cuts across the board in hospitality, real estate, professional services and in retail,” said Vijay Gandhi, regional head at Korn Ferry Digital, the recruitment consultancy.

“And once the headcount correction is complete in [the local] financial services and energy sector, we may see more cuts in rewards and benefits in these categories as well.”

The salary cuts are slowly extending their way into the healthcare sector as well – just about every non-COVID-19 facing medical category is coming across cuts in the number of working hours and, by extension, their take home packages.

By end of June, more businesses and sectors in the UAE will have a better understanding of their short-term revenue prospects. By then, they will also have a better reading on what their staff strength should be – and whether there should be more trimming of the workforce. Or whether they should consider a few hires as well.

A long summer
So, realistically, it could be September before such decisions need to be taken. The coming weeks will then prove to be laden with anxiety for those who are expecting to land a job option after being laid off at their current employers.

There are multiple instances of recruitment decisions having been made in February/March, and then the companies rescinding those offers to the chosen candidates citing the business uncertainty.

“The decision to hire is taking longer – so job creation is now 4-6 weeks from interview and selection compared to 4-6 days in the past,” said Gandhi.

The lucky ones
Recently, free zones and other entities had made it easier for personnel on the visa of one entity being able to smoothly transfer to another if they are likely to be made redundant. “We are seeing more flexibility being offered by the authorities given the circumstances, and the visa transfer process is happening,” said Gandhi.

“But in the vast majority of cases, businesses are going to wait and watch before normal hiring activity starts. Organizations will look to hire from September.”

A few hires are still happening
Even in the business turmoil set off by COVID-19, a few categories are still offering jobs. At the entry level, logistics services personnel and drivers with experience remain in demand.

Not just “routine jobs, there have been confirmations in more technical roles such as procurement and operations in healthcare and e-commerce,” said Gandhi. “Employers should keep an eye for good talent and have the talent acquisition team actively looking for good profiles.

“As such, organizations are not only looking at “right sizing” in numbers but also “future proofing” on what kind of skilled talent will help them in the post-COVID-19 world.”

But for the candidates, the present will be about waiting around for the call to come.

Islamabad, Jun 23: Seven more Pakistan cricketers, including Muhammad Hafeez and Wahab Riaz, selected for the tour of England have tested positive for COVID-19, taking the total to 10, the PCB revealed on Tuesday.

The seven who tested positive on Tuesday are Kashif Bhatti, Muhammad Hasnain, Fakhar Zaman, Muhammad Rizwan, Imran Khan, Hafeez and Riaz. Shadab Khan, Haider Ali and Haris Rauf had returned positive tests on Monday.

“It is not a great situation to be in and what it shows is these are 10 fit and young athletes...if it can happen to players it can happen to anyone,” Pakistan Cricket Board (PCB) CEO, Wasim Khan told a media conference.

He said a support staff member, masseur Malang Ali, had also tested positive for COVID-19.

Khan said that the players and officials would now assemble in Lahore and another round of tests would be carried out on June 25 and a revised squad would be announced the next day.

The squad has to leave on June 28 for the series scheduled to be held next month, he said.

“It is a matter of concern but we shouldn’t panic at this time as we have time on our hands,” Khan said.

He said the players and officials would be retested on reaching England.