Japanese banking giant Sumitomo Mitsui Banking Corp ( SMBC ) is a step closer to acquiring a major state in Yes Bank, after months of negotiations according to sources quoted by ET.
If the deal goes through, it will trigger an open offer to buy an additional 26% stake in Yes Bank, currently India’s sixth-largest private lender by assets. This move would also make SMBC the bank’s largest shareholder.
Senior SMBC executives were in Mumbai last week to hold high-level talks with SBI and other key shareholders to finalise the terms.
Yes Bank, once in crisis, was rescued in 2020 through a coordinated effort led by the Reserve Bank of India (RBI) and the State Bank of India (SBI), which currently holds a 24% stake. While SBI has been actively seeking a new owner, it is still unclear whether other key stakeholders including HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, and LIC (collectively holding 11.34%), will also exit. Private equity firms Advent International and Carlyle own 9.20% and 6.84%, respectively.
If a 51% stake sale happens, this would mark India’s largest mergers and acquisition deal surpassing SMBC’s previous India investment of $2 billion purchase.
Yes Bank's current Prashant Kumar’s term ends in October. If SMBC completes the acquisition, it is expected to recommend a successor to the RBI. The Japanese entity has already carved India out as a separate operating region. Rajeev Kannan, SMBC’s Singapore-based co-head of Asia Pacific, will be reporting directly to Tokyo.
SMBC reportedly received verbal comfort from the central bank to retain majority ownership. At present, current foreign direct investment (FDI) rules cap individual foreign bank stakes at 15% while aggregate foreign ownership in private banks is limited up to 74%. However, the RBI has previously made exceptions for distressed banks like Catholic Syrian Bank and Lakshmi Vilas Bank.
Meanwhile, the RBI is firm on maintaining the 26% cap on voting rights, according to sources.
“Eventually the plan is to merge the two (SMBC India and Yes Bank), but that is still far out,” one of the officials told ET. “They two key shareholders SBI and SMBC are fine-tuning the deal structure. But with RBI giving comfort, an announcement is imminent.”
The bank’s performance has steadily improved since its rescue. In FY25, Yes Bank reported a net profit of Rs 2,406 crore, up 93% year-on-year, while gross NPAs fell to 1.6% and net NPAs to 0.3%, down significantly from the 16.8% and 5% levels seen in FY20. Deposits rose to Rs 2.85 lakh crore in FY25, up nearly threefold since the crisis.
Commenting after the March quarter earnings, Yes Bank’s CEO Prashant Kumar said, “We would like to keep the proportion of retail and SME (small and medium enterprises) at around 60%.”
“Last fiscal, we continued to make steady improvements across all the core operating metrics and progressed well on the key strategic objective of improving the profitability of the bank.”
If the deal goes through, it will trigger an open offer to buy an additional 26% stake in Yes Bank, currently India’s sixth-largest private lender by assets. This move would also make SMBC the bank’s largest shareholder.
Senior SMBC executives were in Mumbai last week to hold high-level talks with SBI and other key shareholders to finalise the terms.
Yes Bank, once in crisis, was rescued in 2020 through a coordinated effort led by the Reserve Bank of India (RBI) and the State Bank of India (SBI), which currently holds a 24% stake. While SBI has been actively seeking a new owner, it is still unclear whether other key stakeholders including HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, and LIC (collectively holding 11.34%), will also exit. Private equity firms Advent International and Carlyle own 9.20% and 6.84%, respectively.
If a 51% stake sale happens, this would mark India’s largest mergers and acquisition deal surpassing SMBC’s previous India investment of $2 billion purchase.
Yes Bank's current Prashant Kumar’s term ends in October. If SMBC completes the acquisition, it is expected to recommend a successor to the RBI. The Japanese entity has already carved India out as a separate operating region. Rajeev Kannan, SMBC’s Singapore-based co-head of Asia Pacific, will be reporting directly to Tokyo.
SMBC reportedly received verbal comfort from the central bank to retain majority ownership. At present, current foreign direct investment (FDI) rules cap individual foreign bank stakes at 15% while aggregate foreign ownership in private banks is limited up to 74%. However, the RBI has previously made exceptions for distressed banks like Catholic Syrian Bank and Lakshmi Vilas Bank.
Meanwhile, the RBI is firm on maintaining the 26% cap on voting rights, according to sources.
“Eventually the plan is to merge the two (SMBC India and Yes Bank), but that is still far out,” one of the officials told ET. “They two key shareholders SBI and SMBC are fine-tuning the deal structure. But with RBI giving comfort, an announcement is imminent.”
The bank’s performance has steadily improved since its rescue. In FY25, Yes Bank reported a net profit of Rs 2,406 crore, up 93% year-on-year, while gross NPAs fell to 1.6% and net NPAs to 0.3%, down significantly from the 16.8% and 5% levels seen in FY20. Deposits rose to Rs 2.85 lakh crore in FY25, up nearly threefold since the crisis.
Commenting after the March quarter earnings, Yes Bank’s CEO Prashant Kumar said, “We would like to keep the proportion of retail and SME (small and medium enterprises) at around 60%.”
“Last fiscal, we continued to make steady improvements across all the core operating metrics and progressed well on the key strategic objective of improving the profitability of the bank.”
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