Max Financial Shares Crash 19% On Exposure To Yes Bank

Shares of Max Financial Services Limited fell over 19 percent to an intraday low of Rs 489.05 apiece on Friday after it said on a conference call its total exposure to the Tier-II bonds of Yes Bank stands at Rs 2,000 crore, of which the balance sheet exposure is Rs 1,000 crore.

YES Bank: Quotes, News

BSE 18.470.39 (-2.11%)

NSE 18.470.4 (-2.17%)

The holding company of Max Life Insurance business organised a conference call for investors and analysts to discuss the development around Yes Bank. The call was scheduled for 9 am on Friday in the presence of senior management team from Max Financial and Max Life.

According to a BloombergQuint report, the company said in the conference call that Tier-II bonds continue to remain safe and it was convinced about its position. Yes Bank contributes around 10 to 11 percent of yearly sales of the company's insurance business on an APE (annual premium equivalent) basis, the report said.

Further, Max Financial Services in the call reportedly said that there is a remote possibility of taking a write-down unless there is a significant risk of a haircut. Its current MTM (market-to-market) would be 8-10 percent of the Rs 500 crore ULIPs (Unit-Linked Insurance Policies) which are part of the Rs 2,000 crore exposure.

On Thursday, shares of Max Financial Shares gained after its board approved a share swap deal with Mitsui Sumitomo. In the transaction, Mitsui Sumitomo Insurance (MSI) will swap 20.57 percent of its shareholding in Max Life insurance with 21.87 percent stake in MFSL.