Sanjiv Bhasin says SBI buying stake in YES Bank as big as a rate cut

What happens to Yes Bank now? Do you think that this is the reason why markets are rallying?

I think this is as big as an interest rate cut. I mean there was so much bonhomie on negativity on YES Bank that as if the system was totally collapsing. So I think this is as big as a rate cut, which the US Fed did a few days back, and this reinsures confidence from the largest bank that there is enough value in a lender like YES Bank.

Secondly, it helps YES Bank tide over the problem of liquidity. They are in the process of getting some other source of funding, but that is all dependent on RBI. So in the very-very immediate term, where people were writing off the bank to go zero, this has come as a very-very big, and it should reinforce confidence in the entire system that there is no problem with banking and nobody will be going down under and so on.

So I think this is a very big move. It also stems from the negativity, which coronavirus has caused despite any causality. So I think that this is a blessing in disguise the Fed rate cut, the fall in crude all board extremely well that the second half, maybe April onwards we should start to see the real V-shaped recovery in the economy and globally where equities have bore the brunt of the selling, there should be a huge comeback so I am extremely positive on the broader market coming the month of April.

Do not you think that the markets are over-cheery right now with regard to the way the stock of YES Bank has gone up soaring because right now we do not have the details about whether it is a merger, a stake buy, whether it is fund infusion. We do not even know the valuation. So what could it do to YES Bank going forward once the details are there because right now definitely it is a very shocking and a very sudden positive reaction coming by?

Well when the stock of YES Bank fell from Rs 50 to Rs 29 there was no alarm bell, so if it just rally 25 per cent, it also tells you that there is a discount of Rs 5 on the futures prices, which is telling you where the bears have got stuck so where do you get this type of arbitrage.

It is telling you that a lot of people who were extremely negative have been caught flat-footed. And like I said we will wait for the numbers, but I think Yes Bank putting it into a perspective if the liquidity infusion comes through State Bank of India and a consortium, it will give it a much needed breather. It is a very high bank on the technology platform and I think if they can weather through this liquidity crunch then we are looking at a much better scenario on credit growth in the second half of the year on the back of the rabi crop and so on.

Also, I think they will have enough momentum to shore up earnings over there after the asset weakness, which is already evident. So I think it is a cause for celebration in fact that the system is responding very-very proactively rather than reactively which is what the Fed did when he cut 50 bps ahead of the meet.

If SBI had to take this bank over, what would it mean for SBI, yes there will be integration issues, but after that?

Let us not value SBI on the basis of just this one bank, they are doing it as -- we do not know whether it is an investment or it is a merger or what, we will know the details as they come. SBI has enough fire power, it has a book of Rs 20 lakh crore as a lending book, for them to absorb this may not be all that difficult. Look at what they are encashing in sum of parts SBI Card, the other businesses so they are amply sufficient with liquidity and the technology platform from YES Bank once you take away the negatives over a period of time could actually enlarge their ecommerce and other things which is very-very prevalent on Yes Bank. So I think in the sum of parts, we will have to wait for the final numbers, but I would think it is a win-win for both.