Mumbai: India Ratings and Research has downgraded YES Banks long-term issuer rating to A- from A, while maintaining it on rating watch negative, reflecting the continued delay and inconclusive quantum of the anticipated equity infusion.This is the third downgrade of the lender by the ratings agency in the last one year.The downgrade reflects the continued delay and inconclusive quantum of the anticipated equity infusion in Yes Bank, India Ratings said.Ind-Ra (India Ratings) believes this could adversely impact the banks franchise and potentially create challenges on the asset and liability side.
The agency notes that the bank has sizable foreign currency liabilities and institutional deposits, it added.The ratings agency is of the view that the required capital infusion is critical for providing sufficient cushion to the possible credit cost impact from the stressed asset pool on regulatory capital requirement in the short- and medium-term, as well as for the banks ability to continue to serve its customers adequately.
Although the liquidity position of the bank seemed adequate at end-September 2019 (liquidity coverage ratio of 114 per cent), Ind-Ra believes that, in the absence of any swift capital raise, the banks ability to manage its asset and liability maturities could get tested further, India Ratings said.While the bank continues to remain in discussions with various potential investors, India Ratings believes raising sizeable capital in the very near term could be challenging and could require various regulatory and other approval.The rating could be reviewed towards February-end 2020, it said.