Yes Bank falls as India central bank censures selective disclosure

Bloomberg

Yes Bank Ltd. fell after India’s central bank reprimanded it for selectively revealing a “confidential” report by the regulator that led to a 30 percent surge in the lender’s shares. The regulator called the disclosure a “deliberate attempt” to mislead the public.
The risk assessment report on Yes Bank prepared by the Reserve Bank of India identified several lapses and regulatory breaches in various areas of functioning, the company said in a stock exchange filing, citing a letter from the regulator. But a Yes Bank statement had only said the audit found “nil divergences” in an assessment of bad loans for the year to March 2018, which led its shares to jump the most since 2005 the next day.
“Nil divergence is not an achievement to be published and is only compliance with the extant income recognition and asset classification norms,” the RBI said in the letter to Yes dated February 15. “The disclosure of just one part of the RAR is viewed by RBI as a deliberate attempt to mislead the public.”
Shares of the bank fell more than 8 percent before paring the losses to 4.6 percent, to trade at 208.95 rupees, at 9:34 am in Mumbai on Monday. Yes Bank was the worst performer on 10-member Bankex index, which was little changed.
Yes Bank’s announcement last week that RBI’s audit didn’t find any divergence in soured debt came as a relief for investors after the lender revised bad-loan figures for fiscal year 2017 marking them four times higher than those previously reported. Following the audit, India’s central bank twice rejected the lender’s request to extend co-founder and former CEO Rana Kapoor’s tenure. Kapoor’s successor Ravneet Singh Gill, who has been heading Deutsche Bank’s India franchise, will take over from March 1.
“There will be some question marks but the key is divergence, the market is focussed on financials,” said Hatim K Broachwala, an analyst at IDBI Capital Market Services Ltd.