Yes Bank to Partner with JC Flowers ARC

Yes Bank announced on Friday that it has signed a term sheet with JC Flowers Asset Reconstruction Co as its joint venture partner for the sale of bad loans worth Rs 48,000 crore. Yes Bank will contribute equity to the ARC, which will initially deal with sour assets from Yes Bank before expanding its scope.

"The bank has signed a binding term sheet with JC ARC LLC and JC Flowers Asset Reconstruction Private Ltd for strategic partnership in relation to sale of identified stressed loans of the bank," Yes Bank said in a regulatory filing.

Yes Bank announced that the JC Flowers ARC will be the starting point for a proposed sale of an identified stressed loan portfolio worth up to Rs 48,000 crore.The term sheet between the two is effective July 15, according to the bank. Yes Bank proposes, in accordance with RBI guidelines, to conduct a transparent bidding process on a Swiss Challenge basis for the sale of such portfolio, with the JC Flowers ARCRs s bid serving as the base bid.

Earlier, Prashant Kumar, MD, Yes Bank, said,  "Setting up of an ARC is not only to resolve our NPAs, we see this as a large business opportunity. We have a very large stressed asset book; resolving this within the bank would take a long period of time. Optically, when any investor is looking at a bank which has 14% GNPA as compared to a bank which doesnRs t have this issue, the valuations look different. The other aspect is, a lot of management bandwidth is going into recoveries, which should be focused on growing the bank."