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FinMach Daily

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Yes Bank close to raising ~ $1B

Yes Bank is on the verge of closing $1 billion fundraising from private equity firms Carlyle and Advent International after much delay due to an ongoing deal to lay off a large portion of bad loans through an asset reconstruction company (ARC).

But, what bad loans?

Remember when the government and RBI had put up a special plan to rescue Yes Bank back in 2020- the Yes Bank Ltd Reconstruction Scheme 2020.

So the bank had a bad loan book of ₹49,000 crore including so-called technical write-offs worth ₹17,000 crore and soured investments. It had chosen JC Flowers ARC as its partner to offload such bad loans to clean up its books and raise capital to fund credit growth.

Yes Bank has already initiated the process of exiting the reconstruction scheme set up two years ago, where it recommended the setting up of an alternative board.

However, this may take some more time as the bank is seeking shareholder approval for a new board of directors in its annual general meeting next month.

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The big EY split- partners eyeing millions

The big accounting firms -- Deloitte, PwC, KPMG, and Ernst & Young - have come under intense pressure in the US and the UK.

Regulators are particularly keen for them to square how they deal with conflicts of interest when selling consulting services to companies while also claiming to be independent auditors of companies' finances.

The EY break-up

The Big Four firm is preparing to break up its global business as part of the biggest upheaval of the accounting sector in two decades.Under the plans, EY is aiming to take its fast-growing consulting business public, hiving it off from the group of accountants who audit clients such as Facebook, Google, Amazon and Oracle.

The audit business would remain a network of partnerships after the break-up, while its advisory business would become a public company. Wow!

Will others follow the lead?

KPMG says it has not spoken to bankers about the option and has no plans to because it believes the combination of the advisory and audit businesses is “the best way to serve our clients, meet quality standards and provide opportunities for our people”. PwC has said it has “no plans to change course”.

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Fintechs have a new RBI headache

The RBI has issued a notification stating that all non-banking institutions (particularly the fintechs) would not be allowed to load credit lines to prepaid wallets and cards.

The order will likely affect fintech players such as Jupiter, slice, LazyPay, Fi, among others.

What is up?

Customers now can't load such wallets/cards with their credit lines. Fintech players usually allow a host of services to the customers including the loading of wallets.

Slice, Uni, Fi, PayU's LazyPay, etc. have a partnership with banks to extend credit through prepaid co-branded cards. Here the key issuers of such cards are banks like SBM Bank India, RBL Bank.

Also, in some cases, while the card may have been issued by the bank, the credit line is extended by the fintech's NBFC partner.

What’s a PPI?

Prepaid payment instruments are in the form of payment wallets, smart cards, mobile wallets, magnetic chips, vouchers, etc.

Currently, Banks and NBFCs only can issue PPIs.

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Winter is Coming- not GOT, but Crypto!

The wealth-generating hot streak for bitcoin and other cryptocurrencies has turned brutally cold.

All red everywhere

We are seeing prices plunge, companies collapse and skepticism soars, fortunes and jobs are disappearing overnight, and investors' feverish speculation has been replaced by icy calculation, in what is called the "crypto winter."

Sab halaat badal gaye, jazbaat badal diye

It's a dizzying turn of events for investments and companies that at the start of 2022 seemed to be at their financial and cultural apex. Crypto-evangelizing companies ran commercials during the Super Bowl and spent heavily to sponsor sports arenas and baseball teams.

The industry's combined assets back then were estimated to be worth more than $3 trillion; today, they are worth less than a third of that. Maybe. WOW

BTC trades at $20k, bole toh 70% below its November peak of around $69k.

While another leading cryptocurrency, Ethereum, was trading near $4,800 at its November peak; it is now less than $1,000.

Remember the Terra collapse?

The so-called stablecoin Terra collapsed in a matter of days in May, wiping out $40 billion in investor wealth. In the crypto business, stablecoins are marketed as a safe investment and the price of each one is typically pegged to a traditional financial instrument, like the U.S. dollar. Terra instead relied on an algorithm to keep its price steady near $1 - and partly backed up its value with bitcoin.

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