MUMBAI: Yes Bank confirmed that discussions with Japan’s Sumitomo Mitsui Banking Corp. (SMBC) regarding a potential stake sale are at a preliminary stage and do not require formal disclosure under market regulations at this point.
In a filing to the stock exchanges, Yes Bank said it “routinely explores opportunities to enhance shareholder value” and added that “such discussions are preliminary and do not warrant a disclosure under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.”
The clarification comes amid media reports that SMBC is in advanced negotiations to acquire a significant stake in Yes Bank, potentially triggering an open offer for an additional 26 per cent of the bank’s equity.
The move, if it goes through, would need the Reserve Bank of India’s (RBI) regulatory clearance, particularly on foreign ownership limits.
Under existing foreign direct investment (FDI) rules, overseas investors can hold up to 74 per cent in a private Indian bank, but a single foreign entity is normally restricted to a maximum of 15 per cent.
However, the central bank has made exceptions in the past – most notably when Prem Watsa-led Fairfax Holdings acquired a 51 per cent stake in Catholic Syrian Bank (now CSB Bank) in 2018, and when Singapore-based DBS was allowed to take over Lakshmi Vilas Bank in 2020.
Verbal nod from RBI?
According to unconfirmed reports, SMBC has received verbal comfort from the RBI that it may be permitted to take majority control if the proposal progresses. Senior executives from the Japanese lender are said to have met top officials at State Bank of India (SBI) and other major shareholders in Mumbai last week to finalise deal contours.
SBI, which led Yes Bank’s rescue in March 2020 following a severe liquidity crisis, currently holds a 24 per cent stake in the lender. Other domestic institutions – including HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, and LIC- own a combined 11.34 per cent. Private equity firms Advent International and Carlyle hold 9.20 per cent and 6.84 per cent, respectively.
Since the rescue, Yes Bank has seen a notable turnaround. Deposits more than doubled to Rs2.85 lakh crore in FY25 from Rs1.05 lakh crore in FY20. Gross non-performing assets (NPAs) have fallen to 1.6 per cent from a peak of 16.8 per cent, while net NPAs have dropped to 0.3 per cent.
Yes Bank reported a net profit of Rs2,406 crore in FY25, up 93 per cent from the previous year, compared with a loss of Rs16,418 crore in FY20. However, net interest margin (NIM) remained modest at 2.4 per cent.
If approved, SMBC’s entry would mark one of the most significant foreign strategic investments in an Indian private lender in recent years. It could also influence the regulatory posture on similar cases – such as the ongoing divestment of IDBI Bank, where three bidders are in the fray and majority foreign ownership is a live issue.
With a track record of selectively easing ownership norms for strategic investors in stressed banking assets, all eyes are now on the RBI and its stance on allowing SMBC to take control of a revitalised Yes Bank.
