YES Bank Shares Plunge as Lock-in Period Ends, Overall Losses Weigh

 YES Bank Shares Plunge as Lock-in Period Ends, Overall Losses Weigh

The end of the lock-in period for YES Bank shares has resulted in a significant plunge in the value of the bank's shares. On Monday, March 13th, 2023, the bank's shares fell by 12.8% at open, with an intraday low of ₹14.40. Later, it recovered slightly to a high of ₹16.30 but ultimately ended the day 4.9% lower at ₹15.70 on the National Stock Exchange (NSE). The decline in YES Bank's shares can be attributed to the expiration of the three-year lock-in period, which was part of the YES Bank Reconstruction Scheme in 2020.

Under the rescue plan, a consortium of 10 institutions led by the State Bank of India (SBI) had invested ₹10,000 crores in recovering YES Bank. As per the scheme, a three-year lock-in was mandated on 75% of the shares held by all existing shareholders and new investors. As of December 2019, retail ownership of YES Bank stood at 44%, and the number of retail investors was 16 lakh, collectively holding 100 crore shares of the bank. This restriction on the sale of shares also impacted the investments of provident and pension funds in exchange-traded funds that held a stake in the bank.

The end of the lock-in period has raised concerns about the potential for a significant sell-off of YES Bank shares by existing shareholders and new investors. However, analysts believe that the downside on the stock is likely to be limited as it has already seen some correction since the beginning of 2023, falling over 24%. Despite the decline in YES Bank's shares, it is essential to note that the bank has shown positive growth since its rescue in 2020, with its equity growing by over 60% in value since acquired in March 2020.

As of December 2022, SBI held the highest stake at 26.1%, followed by Life Insurance Corporation of India at 4.3%. Housing Development Finance Corporation (HDFC), ICICI Bank, Axis Bank, Kotak Mahindra Bank, and IDFC First Bank hold smaller stakes. The impact of the end of the lock-in period may be felt by these institutions, depending on their strategy and long-term investment goals.

Overall, the end of the lock-in period for YES Bank shares has had a significant impact on the value of the bank's shares. While the potential for a sell-off remains, analysts believe that the downside on the stock is likely to be limited. YES Bank has shown positive growth since its rescue in 2020, and it will be interesting to see how the bank continues to evolve in the future. Investors and shareholders should closely monitor the bank's performance and market trends to make informed investment decisions.