Explain how Yes Bank is capitalizing on the changing environmental factors.

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Discuss the Yes Bank’s strategy to grow.

 

Yes Bank is the country’s youngest bank – and the first greenfield to be set up in 12 years – very much optimistic about its future. It is already drawing up ambitious expansion plans, not just at home but also internationally. Yes Bank began operations in August 2004. It had a successful Initial Public Offering (IPO) in June 2005, when its issue was oversubscribed about 25 times. Today, it has managed to carve a niche for itself in areas like cross-border deals and currency strategies.

“One of the strengths and differentiating features of Yes Bank is its knowledge banking approach. Our approach is service oriented; we offer what is missing in the market place. We offer choice and convenience to customers.”

—Rana Kapoor

Late founder, Yes Bank



It was December of 2006 when Business World rated Yes Bank as the third largest bank in a survey that included both public and private sector banks. This was not the only award the bank got. It has received a number of accolades since its inception in 2004. Considering a late entry in an industry where all others have a prominent set up in the market and the scepticism it faced from the experts on the announcement of entering into this overcrowded market., the bank differentiated itself, by employing what they called “knowledge banking approach”, which has a huge emphasis on technology and human resource. The knowledge banking concept was the main differentiator and using this approach, they were planning to give specialized services.

Yes Bank focuses on three distinct segments: corporate and institutional banking, business and transactional banking, and retail banking and wealth management. The wholesale (corporate and institutional) banking division made waves, when it managed two major overseas Mergers and Acquisitions (M&A) deals on behalf of its Indian clients. Its investment bankers helped stitch up the second largest Indian cross-border acquisition, when Pune-based Suzlon, the world’s fifth largest wind turbine maker acquired Belgium-based Hansen Transmissions International NV, the world’s second largest wind turbine gearbox maker, for $560 million. The other major overseas M&A deal it was involved was of United Phosphorous, which acquired Advanta Netherlands Holding BV for almost $120 million. Leading international financial data and news provider, Bloomberg, recently ranked Yes Bank No 1 in the M&A Outbound cross-border transactions category, and No 5 in the M&A “overall” category.

The focus of its corporate division is on knowledge-driven banking. The bank has built up specialized domain knowledge and understanding in some key sectors, including food and agribusiness, life sciences, telecommunications, media and technology, infrastructure, and select manufacturing industries including textiles. The bank has recruited ‘technocrat bankers’ – with engineering and MBA backgrounds – who can offer in-depth insights into these sectors to its clients. The bank has also invested considerably in its treasury practise and aims to ultimately emerge as a rupee bank.

In the corporate finance segment, Yes Bank’s strengths are in structured lending programmes, long-term funding for infrastructure projects, funding of acquisitions, and financial restructuring. One sure-fire segment of the corporate world, offering tremendous potential for growth, is “Emerging Indian companies”. Yes Bank hopes to play the role of ‘money doctor,’ providing a 360-degree approach, thanks to its domain knowledge and expertise in specific fields. Many of these mid-size companies have overseas expansion ambitions, and Yes Bank will be there to help them in acquiring other firms, or setting up overseas operations. The bank will of course also be catering to large companies (with turnover exceeding $100 million), and small and medium enterprises (in the $1 million to $10 million bracket).

Like other PSU and Private Banks, Yes Bank is also focusing on retail sector, but its retail focus will be on owners of tiny businesses and firms in the unorganized sector, and affluent individuals with incomes exceeding $10,000 annually. There are about 12 million households in this category in India. Some can be found outside the metros and large cities and state capitals.

The Yes Bank believes that despite the growing emphasis on the retail sector, there is vast room for improvement in service standards. The bank, which has entered into alliances with best-of-breed technology partners – and has won awards from AC Nielsen (for Technology Innovation) and the National Association of Software and Service Companies (for IT innovations in Emerging India) – aims “to create a delightful experience” for its customers, and fill “the missing link” in the Indian banking sector.

The bank also offers wealth management services to both resident high net worth individuals and for ‘global Indians’. Besides expanding its domestic network, Yes Bank does hope to emerge as a global bank – with a strong presence in countries with a significant ethnic Indian population. But in its first phase of expansion, it focused predominantly on building a strong home-country bank. With a critical mass of Indian companies expanding overseas into Europe and South East Asia, there is strong need for advisory services from Indian banks, and a very compelling case for their overseas presence.


Source: Business Environment, Dr Vivek Mittal, Excel Books; “Wireless Banking getting nod”, www.Intel.com./casestudies/yes_bank.pdf

Mayank Rai

Hi, My name is Mayank Rai. I found that Blogging is an easiest way to share your knowledge with everyone & learn something new from there. facebook telegram

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