InvestorQ : Why has HSBC downgraded SBI? Is it because It is bailing out Yes Bank?
Anjana Aiyar made post

Why has HSBC downgraded SBI? Is it because It is bailing out Yes Bank?

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Arya Nanda answered.
10 months ago
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In fact, HSBC has downgraded SBI from “Buy” to “Hold” after it agreed to participate in the Yes Bank bailout. It may be recollected that to protect the integrity of the banking system, the government had called upon SBI to infuse Rs.2500 crore into Yes Bank and work out a rescue package for the bank. However, HSBC is of the view that the deal would impair the asset quality of SBI and has reduced the price target of SBI from Rs.405 to Rs.305 and downgraded the stock from “Buy” to “Hold”. Under the reconstruction plan, SBI will immediately infuse Rs.2500 crore and take the infusion up to Rs.10,000 crore; either on its own or with other partners. HSBC is of the view that this could pose an unnecessary strain on SBI and also that if the bailout does not work out then SBI may have to absorb Yes bank fully.

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