INSUBCONTINENT EXCLUSIVE:
Mutual funds owned by Nippon, Kotak, Franklin and firms like Reliance Industries, Barclays Bank, Bajaj Allianz including 34 institutions and
pension funds stand to lose thousands of crores with the Reserve Bank of India deciding to wipe out their AT1 bond investments in Yes
Bank.
If the draft reconstruction scheme for Yes Bank is exercised, Nippon MF will lose a whopping Rs 2,500 crore, Franklin MF Rs 590 crore,
Barclays Bank Rs 246 crore, Kotak MF Rs 130 crore and RIL Rs 100 crore, documents showed.
Other institutions which stand to loose are
Reliance Nippon Life Insurance, UTI MF, Larsen and Toubro and Bharti Axa
Even pension funds like the State Bank of India employees pension fund, the Larsen and Toubro officers and supervisory staff pension fund,
the NPS trust fund, Indian oil corporation employees provident fund (refineries division), national hydroelectric power corporation limited
cautiously avoided investing in those papers.
The RBI has come up with a restructuring plan to give a new life to Yes Bank that would entail
a minimum equity investment of Rs 2,450 crores by the State Bank of India, but that would keep these entities separate leaving scope for the
state-run lender to exit the investment when it turns profitable
Yes Bank have filed a court petition against the total write-down of these bonds, a move that may stall a quick rescue of Yes Bank
Axis Trustee Services filed the petition in the Bombay High Court on Monday against RBI, Yes Bank and the government.
Globally, perpetual
bonds are perceived as risky as the yield differential is quite high over normal bonds unlike in India until recently.
With the latest
collapse, the yield differential is now expected to rise up to 200 basis points more making it difficult for mid to small size entities that
exit route normally provided to investors after five years, say market experts.
Earlier in December last year, Andhra Bank flip-flopped in