Indian banking sector clobbered amid fallout from Yes Bank crisis

India’s Yes Bank had struggled for months to raise the capital it needs to stay above regulatory requirements, without any success. (AP)
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Updated 09 March 2020

Indian banking sector clobbered amid fallout from Yes Bank crisis

  • Yes Bank had struggled for months to raise the capital it needs to stay above regulatory requirements, without any success

BENGALURU/MUMBAI: Shares in Indian banks slumped to a more than 13-month low on Monday as the crisis at Yes Bank Ltd. spooked investors and sparked concerns about the broader sector.
“The main contagion effect would be on the depositor base of private sector banks,” Macquarie analyst Suresh Ganapathy said in a note to clients on Monday.
Noting the collapse of Yes Bank comes close on the heels of a string of other collapses, Ganapathy said it was shaking “depositor confidence in the financial system.”
Yes Bank, weighed down by an increasing pile of bad debt, had struggled for months to raise the capital it needs to stay above regulatory requirements, without any success.
The Reserve Bank of India (RBI) took control of Yes Bank last Thursday, imposing limits on withdrawals to protect investors and saying it would work on a revival plan. Yes Bank’s shares plummeted 56 percent the following day, leading to a rush by depositors to withdraw funds from the bank.
The Indian government has prodded the country’s largest bank, state-run lender State Bank of India, to step into the breach and lead the planned rescue of Yes Bank, a measure some said might not be enough to stem sector-wide panic.
“Given the rapid build-up of fear-psychosis regarding Yes Bank, we think the investment by SBI in no way guarantees that there will be no deposit-run on Yes Bank once the moratorium is lifted,” banking analysts at research firm Nirmal Bang said.
The Nifty banking index sunk more than 4 percent early on Monday, hitting its lowest levels since January 2019, as investors fretted about the health of the sector.
The fallout also stung some shadow banks, or so-called non-banking finance companies (NBFCs).
Shadow lender Indiabulls Housing Finance said on Sunday that Yes Bank owed it 6.62 billion rupees ($89.5 million) that it had invested in Yes Bank debt, sending shares in Indiabulls down 13 percent Monday morning.
Small private banks were also hit hard. Shares in lenders RBL Bank Ltd. and IndusInd Bank Ltd. fell 9.7 percent and 6.7 percent, respectively.
“This is no longer a capital problem now; it has now snowballed into depositor confidence issue and that is a far more serious issue,” said Ganapathy.


Emirates stops flights to three major Australian cities

Updated 16 January 2021

Emirates stops flights to three major Australian cities

  • Flights to/from Sydney, Brisbane and Melbourne will be suspended until further notice: Emirates
  • The airline will still run two flights a week to Perth

DUBAI: Emirates has suspended flights to Australia's three largest cities as the country further restricts international arrivals over fears of new virus strains.
The Dubai-based carrier was one of the last to maintain routes into and out of the country's east coast throughout most of the pandemic but on Friday evening told travellers a handful of planned flights next week would be the last.
"Due to operational reasons, Emirates flights to/from Sydney, Brisbane and Melbourne will be suspended until further notice," Emirates said on its website.
The airline will still run two flights a week to Perth, but the cuts are another barrier for tens of thousands of stranded Australians still attempting to return home.
The Australian government responded by announcing more repatriation flights and said other carriers still flying services to the cities could fill the gap.
"The capacity that Emirates was able to use within the cap will be allocated to other airlines, ensuring that there are still as many tickets, as many seats available into Australia," Finance Minister Simon Birmingham said.
A small number of airlines - including Qatar Airways and Singapore Airlines - are still running services to Australia but local media were already reporting delays and cancellations among returning travellers.
Australia's borders have effectively been closed since March to curb the spread of the virus, with the government even limiting the number of citizens allowed to return.
Last week travel restrictions were further tightened, with arrival numbers slashed and all travellers into the country requiring a negative Covid-19 test before flying.
In making the changes, Prime Minister Scott Morrison cited a growing number of people in quarantine testing positive for new strains of Covid-19.
Fears that a variant of the virus from Britain, believed to be more contagious, had leaked into Brisbane from hotel quarantine triggered a snap lockdown in the city last week.
"There are many unknowns and uncertainties in relation to the new strain, and so that's why this precautionary approach, we believe, is very sensible," Morrison said.
Australia continues to deal relatively well with the virus, having recorded about 28,600 cases and 909 deaths linked to Covid-19 in a population of 25 million.