From Yes Bank to No Bank

How the Bank fell down, and why it could very well duplicate

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This is a real exciting time to write about Yes Bank, one of my favourite stocks of all time. I really don’t know why people hate on the stock (despite it losing over 95%). That has always been the one stock, that has saved me from losses, and for the record, I have never made a loss on Yes Bank. And yes, I shorted it always. It just seems funny that, everyone seems to be an expert on Yes Bank, and even the entire Indian banking sector, after just reading the title of the first google search result!

Anyway, back to Yes Bank… for Investors, it was very simple, they could’ve sold any time! There were telling signs! Even if you don’t know how to read a balance sheet, always remember, that, if the Annual Report of your company suddenly gains 50% in size, it is time you probably sell all your shares in that company, as the management is definitely explaning too much stuff, and trying hard to sell you some complex stuff that you probably are better off without! For Yes Bank it was 2016-17.

The Story of Yes Bank, once hailed as the prodigal son of new age private sector banks, which once redifined marketing, and had a huge following everywhere, unfortunately couldn’t ride on it’s hype, and today, the only remains of it’s marketing pitch - The lingering emphatic voice of Harsha Bhogle yelling into the mic… “…and that is a Yes Bank Maximum!” seems fit for the 50k withdrawal limit.

Yes Bank was built as a customer focussed bank which would say Yes to the customer, and yeah, that was pretty much the reason for it’s collapse. Whoever would approach them with a loan proposal, Yes Bank was like “oh.. wait.. we’re Yes Bank, let’s say YES!”

From a loan book at a peak of 3 lakh crores, almost all turned bad, and it is now left with less than 35 thousand crores, with over 30 thousand crores of those possibly turning into NPAs soon enough. And, as if these weren’t enough, it also lent to companies which ended up turning belly up overnight. OVERNIGHT!

CG Power, Cafe Coffee Day, IL&FS, Dewan Housing Finance, Jet Airways, Cox & Kings, Anil Ambani Group (13k crores here alone), Essel Group…. It’s like Yes Bank cherry picked all the borrowers who would turn Insolvent and not pay it back, and told them, “Hey there! Need a few thousand crores? I happen to have a few thousand crores just lying around in my kitty…”

One might argue it was sheer conincidence, and a lot of bad luck, but, the math doesn’t quite add up.

But, wait… where is that money? Money has to flow between people in an economy right? After all, if someone is losing, someone else should be gaining right? That is the basis of Economics, be it prehistoric or modern. In the case of Yes Bank, the biggest Money suckers were their borrowers who in turn gave you and me, sheer discounts on their services, in the rare hope of us endorsing their services. So, before you say Yes Bank was bad, in giving out those bad loans, and you never gained anything, and some rich person somewhere on top got even more richer, think about these…