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Yes Bank plans to set up DIFC branch

July 1, 2014



The bank recently raised $500 million through a qualified institutional placement (QIP). And reflecting the bullishness in the Indian capital markets, it was able to generate an aggregate demand of $2.5 billion for the issue.



With the Middle East being a thrust area for growth for India's leading private sector lender, Yes Bank, it is looking forward to establishing a branch at the Dubai International Finance Centre (DIFC).







Rana Kapoor, managing director and CEO, Yes Bank, told Khaleej Times that the bank plans to set up a branch in the DIFC in the near future. "We have already set up our first international beachhead in Abu Dhabi in the form of a representative office," he noted.







The bank recently raised $500 million through a qualified institutional placement (QIP). And reflecting the bullishness in the Indian capital markets, it was able to generate an aggregate demand of $2.5 billion for the issue.







"This demand was seen from domestic mutual funds and insurance firms, global long-only investors, sovereign wealth funds and hedge funds across the US, Europe and Asia," remarked Kapoor.







"We continue to see a strong demand for Yes Bank paper. However, given that our tier I capital adequacy is in excess of 13 per cent and total capital adequacy is in excess of 18 per cent now, we will raise capital at the right time, possibly in 18-24 months."







The bank went in for the $500 million issue to capitalise on the improved growth prospects. According to Kapoor, the bank was well-capitalised to grow at about 20 per cent for the foreseeable future, given the strong return on equity of over 25 per cent and high retention of profits.







"However, given the decisive mandate of the new government, we believe that there can be significant improvement in the political and economic scenario in India, providing better opportunities for growth," he said. "We see every reason for the Indian economy to achieve a growth trajectory of 7-8 per cent in the next couple of years. Given the strong mandate (for the Modi government), business-friendly track record of the government, a vibrant democratic process and a demographic dividend, India is definitely one of the most attractive markets for equity investments."







Asked whether the bank armed with an additional $500 million was on the prowl for acquisition of smaller banks in India, Kapoor said its immediate focus was to look at organic growth opportunities as the economic cycle turns favourably and the economy gathers growth momentum.







"We may also look at acquisition opportunities in the nature of a retail and small and medium bank, with the right people at the right time," added Kapoor. "This will give us scalability and outreach, particularly on the retail side."







The top private banker pointed out that fiscal 2014-15 would be a year of consolidation and enhanced risk management for the Indian banking sector. "We should see a robust growth in the banking sector only in FY 2015-16 onwards with better capitalisation and de-risking of past CDR/NPA overhanging issues."







Kapoor admitted that there was concern of late that the appreciation of the Indian could reverse the trend of growing remittances to India, especially from the Gulf. However, the latest data suggests that despite the rise in the value of the rupee, remittance flows have continued to rise during the first three months of 2014 by around 2.5 per cent year-on-year.







"Moreover, interest rate spread between the UAE and India of around 300bps, with attractive personal loan options available in the Gulf region, means that remittances should continue to rise on YoY basis," he said. "In fact, political stability and decline in rupee volatility should be positive for such a carry-based model."




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Source: Khaleej Times (United Arab Emirates)


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