Yes Bank share jumps 10% after Japan’s SMBC plans to acquire 51% stake

On Tuesday, the Yes Bank share jumped upto 9.6 percent in early trade to a day’s high price of Rs. 19.44 per share on NSE after Japan's Sumitomo Mitsui Banking Corporation (SMBC) planned to acquire a controlling stake in the private bank, marking a significant development in India's banking sector. After months of negotiations, SMBC and the State Bank of India (SBI), which currently holds nearly 24 percent of Yes Bank, have initiated and advanced talks on the stake sale, as per various sources.

SMBC is expected to purchase up to a 20 percent stake directly from SBI and plans to infuse fresh capital amounting to an additional 6 to 7 percent stake in Yes Bank. This combined acquisition would bring SMBC's shareholding close to 26 percent, the regulatory (RBI) cap on voting rights for a single shareholder in an Indian private bank. However, SMBC aims to increase its stake to 51 percent through an open offer to other shareholders, which would make it the largest shareholder and give it effective control over Yes Bank's operations, subject to regulatory approvals.

The open offer triggered by this acquisition would allow existing shareholders, which include Axis Bank, ICICI Bank, Kotak Mahindra Bank, HDFC Bank, and private equity firms like Carlyle and Advent International, which collectively hold significant stakes. Life Insurance Corporation of India (LIC), holding about 3.98 percent, is also among the potential sellers, as per various sources.

The Reserve Bank of India (RBI) has reportedly given SMBC a verbal assurance to retain a majority stake in Yes Bank, although voting rights will remain capped at 26 percent, in line with Indian banking regulations, as per various news media outlets. This arrangement is similar to previous exceptions granted in the sector. To ensure operational control, SMBC is expected to nominate directors to key board committees, including the nomination and remuneration committee, which influences top management appointments such as the CEO.

Yes Bank's current CEO, Prashant Kumar, is set to complete his term by October 2025. Post-acquisition, SMBC will likely propose new leadership candidates to the RBI. SMBC has already prepared for this acquisition by carving out India as a separate operating region within its Asia Pacific division, with senior executives reporting directly to Tokyo, as per sources.

As per Mint report, the deal is valued at approximately $1.7 billion, which would be SMBC’s largest investment in India, surpassing its $2 billion acquisition of Fullerton India Credit. The transaction is expected to be one of the largest mergers and acquisitions in India's private banking history, signaling a major foreign investment and strategic shift for Yes Bank following its 2020 crisis and turnaround led by SBI and other domestic banks and investors.

SMBC's planned acquisition of a controlling stake in Yes Bank, which is facilitated by SBI and other institutional investors, represents a landmark deal in the Indian banking sector. It combines fresh capital infusion, foreign investment, and regulatory cooperation to revamp Yes Bank’s operations and stability to aid its future growth.