Yes Bank Ltd concluded the transfer of identified bad loan portfolio to an Asset Reconstruction Company named JC Flowers.

The lender identified a stress pool worth Rs 48,000 crore as of March 31, 2022, further making some recoveries. The net of those recoveries is transferred to the ARC. Yes Bank selected JC Flowers ARC as a partner in July, forming an Asset Reconstruction Company (ARC) to sell Bank’s bad loans at Rs 48,000 crore.

As per the RBI guidelines, Yes Bank proposes to control transparent bidding procedures amid the Swiss Challenge basis for the portfolio sale, using JC Flowers ARC’s bid considering a base bid. JC Flowers agreed to pay Rs 11,183 crore for the entire pool of the stressed loans, assuring 23% Bank recovery.

Yes Bank CEO Prashant Kumar mentioned the transfer of the bad loans might result in a reduction of the Bank’s gross NPA ratio by 2% from the current 12.89%. The net NPA ratio would be at 1% post-transfer.

Yes Bank shares rose 35% in the four trading sessions between December 8 and 13. Morgan Stanley initiated coverage on Yes Bank with an underweight rating, mentioning prospects for the lender that are priced in. The note sparked a correction in the stock, ending 7.7% lower. Shares shed another 5.6% on Friday.