The Banker Who Crushed His Diamonds by Furquan Moharkan (read novel full txt) 📕

were prompt and cooperative. Our total money with them was more than Rs 30 lakh. We were never told of a problem and it wasn’t until the Deccan Herald report that I realized something was wrong. Once I had figured it out and begun dissolving the fixed deposits, the bank also figured that we knew. One of the employees contacted me and admitted that things did not look good but did not prevent me from removing my money. The actual relationship manager never really got in touch about it, but overall they were cooperative when I removed my family’s money from the bank. There was little conversation with the bank all through this.’

This clearly establishes that the morale at the grass-roots level was completely broken.

The day the bank failed and had to be bailed out, he had a further Rs 5 lakh in the bank, while he had moved the rest of his savings amounting to Rs 25 lakh to ICICI bank. ‘It was terrifying to think of losing that, despite having saved most of it. Hard-earned money is difficult to part with, irrespective of the amount. I went to the bank some days later and I could see people in despair, some were students with no money other than what was in their accounts and some were businessmen who had both their company’s accounts and savings in the bank. The bank staff was indifferent to them,’ he said.

But this was not the only part of my story: the bank was also delaying its results because of erosion in its deposit base. SEBI regulations, under the compliance calendar, state that any listed firm must submit their results to the exchanges within forty-five days of the end of the quarter. They also need to inform the exchanges five days prior to holding the board meet to take on record financial results for the quarter. In the case of YES Bank, forty-two days out of these forty-five days were over when I rolled out the story on 12 February.

After the story was published, the same evening, the bank confirmed delaying its results to 14 March — a month’s delay from the SEBI-stipulated deadline. In this exchange filing, the bank yet again got a new set of prospective investors, including J.C. Flowers & Co. LLC, Tilden Park Capital Management LP, OHA (UK) LLP (part of Oak Hill Advisors) and Silver Point Capital.

‘The bank and its financial advisers are currently in discussions with these investors on the commercial terms, including pricing, of their investments which, it may be noted, will be subject to certain conditions and receipt of requisite approvals, including regulatory approvals with respect to the size of the stake to be acquired, as well as necessary dispensations with regard to applicable pricing guidelines,’ the bank said in this filing.

In fact, Anshu Jain, who was acting as an adviser to Lakshmi Vilas Bank too, had floated the name of Tilden Park for picking up a 10 per cent stake. Tilden Park is a fund that invests in stressed assets and has said that it can invest up to $500 million in YES Bank. ‘There was a feeling that they will invest more,’ a former senior executive from the bank told me.

Anshu Jain, who stayed at Deutsche Bank for twenty years and who Ravneet claimed was his mentor, didn’t have a graceful exit with the German lender. In June 2015, investor frustration about the bank’s performance had become obvious. At the annual meeting, 39 per cent voted against Deutsche’s management board and several investors called for Jain and his co-CEO Juergen Fitschen to resign.

The surprise move came just over a month after Deutsche was fined a record $2.5 billion (£1.7 billion) for rigging London Interbank Offered Rate (LIBOR), ordered to fire seven employees and accused of being obstructive towards regulators in their investigations into the global manipulation of the benchmark rate. The penalties on Deutsche Bank also involved a guilty plea to the Department of Justice (DoJ) in the US and a deferred prosecution agreement. Jain headed its investment bank when LIBOR was rigged, but the bank said that he has been cleared of any wrongdoing.

On 7 June 2015, he resigned as co-CEO of Deutsche Bank, along with Initially, Anshu was also accused of misleading German Federal Financial Supervisory Authority (BaFin) — a charge on which he was later given a clean chit.

LIBOR is an average interest rate calculated through submissions of interest rates by major banks across the world. The scandal had come to the fore after US-based daily Wall Street Journal, on 16 April 2008, stated that some banks might have understated the borrowing costs they reported for the LIBOR during the 2008 credit crunch, which may have misled others about the financial position of these banks.

Despite his global exposure, Anshu always maintained a connect with India. In a conference in London in 2015, he had said: ‘If there are ways in which I can help the country, I’ll always choose to do so.’

Somewhere, given Anshu’s past, there was a feeling that YES Bank wasn’t able to attract the right people at right time — from O.P. Bhatt to Anshu Jain.

But the bank had reason to hire Cantor and Anshu Jain. In the August issue, CLSA India Private Limited, J.M. Financial Limited, Motilal Oswal Investment Advisors Private Limited and Prime Securities Limited were the global coordinators and book running lead managers to the QIP issue. But none of them were able to get fresh foreign investors on board. The bank wanted foreign investors with huge coffers at this point in time.

Back at YES Bank, questions were raised about the board and its standards. But to be fair, many of the directors on the board seemed to be naïve based on the interviews that I had conducted for this book. Many said that they didn’t go back home and read the documents offered to them during these meetings. This, in many ways, raises questions on the seriousness of the board members in India