26/11 attacks and how Yes Bank’s fortunes started dwindling

26/11 and Yes Bank

The Hush Post| 4:29 pm|one-minute-read|

Yes Bank would have been a no bank hadn’t it been a timely government intervention. But now it is a script that fits a movie. The Yes Bank story began in 1999 when three successful bankers came together. And it started getting into the direction it landed at after one of its partner’s Ashok Kapur died in 26/11 attacks.

The three — Ashok Kapur, the former country head of the ABN Amro Bank, Harkirat Singh, the former country-head of the Deutsche Bank, and Rana Kapoor, former corporate finance head of the ANZ Grindlays Bank wanted to float a company.

In an interview to the Economic Times, Harkirat Singh said he accepted Rana Kapoor as the third partner only after strong recommendation of Ashok Kapur.

The three Indian promoters had 25 per cent share in the non-banking financial corporation. The rest 75 per cent were with the Rabo Bank of the Netherlands. It became the Yes Bank in 2003. It was also the same year when Harkirat Singh quit the Yes Bank over issues pertaining to influence exerted by Rabo Bank in appointment of CEO and executive chairman.

Yes Bank acquired license in 2004. It went to stock exchange with IPO (initial public offer) in 2005. The Yes Bank started making slow and steady progress in the initial years.

But it got a huge shock in 2008. Ashok Kapur, then chairman, was at the Trident Hotel on 26 November 2008 when 10 Pakistani terrorists attacked Mumbai. The Trident Hotel was one of the targets of the 26/11 terror attack. Ashok Kapur died in the terrorist attack that Thursday night.

This changed the way Yes Bank would go about its business. Now the new leader was Rana Kapoor. Ashok Kapur seemed to have fancied Rana Kapoor. This stems from the fact that he is said to have got his wife, Madhu Kapur’s sister Bindu get married to Rana Kapoor. This marriage made Ashok Kapur and Rana Kapoor not only business partners but also relatives. These ties came under scrutiny soon.

Battle for supremacy in the Yes Bank ensued. This props up from the failed attempts by Madhu Kapur in 2009 and again in 2011 to get her daughter Shagun on the board of directors.

The moves were scuttled apparently by Rana Kapoor, now in full control of the Yes Bank. During this period, Madhu Kapur’s name from major promoters was also removed in the Yes Bank’s communiqués.

In 2012, Rana Kapoor published a history of the Yes Bank but it had no reference to Ashok Kapur. The dispute settled finally in 2015 with Kapurs getting the seats on the board of directors.

The period of internal fight was also the phase when the Yes Bank went aggressive with lending. A Business Today report says that of around Rs 35,000 crore of stressed loans, most of the lendings were done in post-2008 period.

The Yes Bank gave loans to companies which were struggling in their businesses. These companies included the Anil Ambani Group of Companies, the Essel Group, the Dewan Housing Finance Corporation Ltd (DHFL) and Infrastructure Leasing and Financial Services (IL&FS). Of these DHFL and IL&FS) have collapsed and taken over by the government for restructuring.

By the time dispute between Kapoor and Kapurs settled, the steel frame of the Yes Bank had begun creaking. Global major financial services firm, the UBS in a report dated 7 July 2015, said the Yes Bank had the strongest growth in loans to potentially stressed companies.

 

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