MUMBAI: In a move signaling growing foreign interest in Indian private sector banks, State Bank of India (SBI) on Friday said it will divest around 13.19 per cent of its stake in YES Bank Ltd to Japan’s Sumitomo Mitsui Banking Corporation (SMBC) for Rs8,888.97 crore. The deal, priced at Rs21.50 per share, will bring down SBI’s stake in the private lender from 24 per cent to 10.81 per cent, subject to regulatory approvals.
SBI, along with seven other top lenders including HDFC Bank, Kotak Mahindra Bank and Axis Bank are cumulatively offloading a 20 per cent stake in YES Bank in favour of SMBC, according to a filing to the stock markets.
The move once concluded will render SMBC the largest stakeholder in YES Bank. As of December 2024, Sumitomo Mitsui Financial Group (SMFG), the parent company of Sumitomo Mitsui Banking Corporation (SMBC), reported total assets of approximately $1.98 trillion.
This positions SMFG among the world’s largest banking institutions, underscoring its significant global financial presence.
SMBC, 3rd major foreign entity
This transaction will also make SMBC the third major foreign entity in recent years to acquire a significant stake in an Indian private bank. Earlier, Canada-based Fairfax Holdings had invested in CSB Bank (formerly Catholic Syrian Bank) when it was struggling with capital adequacy issues, while Singapore’s DBS Bank fully acquired the near-insolvent Lakshmi Vilas Bank in 2020.
In a stock exchange filing, SBI stated that its Executive Committee of the Central Board approved the sale of 413.44 crore equity shares of YES Bank to SMBC. The deal is expected to close within 12 months or as mutually agreed by the parties.
YES Bank shares surged 11.74 per cent intraday to a high of Rs20.36 before settling 9.77 per cent higher at Rs20 on the BSE. SBI shares also closed 1.39 per cent up at Rs779.40.
Market participants interpreted the move as a potential turning point for YES Bank, which has been gradually regaining investor confidence after a crisis in 2020 led to a restructuring backed by several domestic financial institutions.
Besides SBI, other Indian stakeholders in YES Bank include Kotak Mahindra Bank, Axis Bank, ICICI Bank, and LIC, with a combined holding of 11.34 per cent. PE giants Advent International and Carlyle Group also hold 9.2 per cent and 6.84 per cent, respectively.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said the announcement of a marquee foreign investor is boosting sentiment. “YES Bank’s latest quarterly results were encouraging, and the broader BFSI outlook is favourable. Long-term investors with a higher risk appetite can consider holding the stock.”
YES Bank turnaround
Amit Goel, Co-founder and Chief Global Strategist at Pace 360, revealed that his firm has been actively accumulating YES Bank shares. “We expect a return of 15–20 per cent over the next few months. This deal reflects confidence in the bank’s turnaround story,” he said.
From a technical standpoint, the momentum appears to support the bullish narrative. Jigar S. Patel of Anand Rathi noted that the stock has broken above a key trendline resistance and bounced back from a crucial support level, indicating a trend reversal if backed by volume and sentiment.
Analysts also see SMBC’s entry as a validation of YES Bank’s long-term potential and a signal of the growing attractiveness of Indian financial institutions for global players. If the deal sails through, YES Bank may not only gain capital strength but also benefit from the strategic expertise and global network of one of Japan’s leading banks.
