Yes Bank Shares Rose 8% After SMBC Agreed to Buy a 20% Stake

On Monday, the Yes Bank shares jumped 8.3 percent, touching a day’s high price of Rs. 21.70 per share after the company’s exchange filing revealed that Japanese financial institution Sumitomo Mitsui Banking Corporation (SMBC) has agreed to acquire a 20 percent stake in Yes Bank shares, marking the largest cross-border banking deal in India's financial sector. This transaction involves SMBC purchasing shares from a consortium of existing shareholders, which includes the State Bank of India (SBI) and seven other Indian banks. As per sources, the valuation is approximately Rs. 13,480 crore.

Specifically, SMBC will acquire a 13.19 percent stake from SBI, which currently holds around a 23.97 percent stake in Yes Bank following a rescue-led restructuring in 2020. SBI will reduce its holding to around 10.78 percent after this sale. The stake sale price is at Rs. 21.50 per share, resulting in SBI’s value around Rs. 8,889 crore from this transaction, and this marks a partial exit from its investment made during the 2020 rescue, as per various sources.

In addition to SBI, SMBC will purchase a combined 6.81 percent stake from other prominent Indian financial institutions, including Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, and Kotak Mahindra Bank. These banks collectively can receive around Rs. 4,594 crore from their stake sales. 

This strategic investment by SMBC positions it as the largest shareholder in Yes Bank, a significant milestone for the private lender. The deal highlights SMBC's ambition to expand its footprint in the Indian banking sector, which has traditionally seen limited foreign ownership due to regulatory restrictions and state influence. SMBC, Japan's second-largest bank and a Sumitomo Mitsui Financial Group subsidiary, views India as a high-growth market offering opportunities that contrast with Japan’s low-interest-rate environment and demographic challenges.

The transaction is subject to regulatory approvals from the Reserve Bank of India (RBI), the Competition Commission of India, and Yes Bank’s shareholders. This acquisition represents a new chapter for Yes Bank, which has been rebuilding since its 2020 crisis when the RBI intervened due to liquidity issues and governance concerns. SBI had led a consortium to rescue the bank at that time. Since then, Yes Bank has operated without a promoter, and SMBC’s entry as a major shareholder is expected to bring fresh capital, strategic expertise, and international credibility to the bank’s growth plans.

Financial advisors JPMorgan and Jefferies guided SMBC through this deal. This investment aligns with a broader trend of Japanese financial institutions seeking international acquisitions to diversify and grow amid domestic economic challenges in Japan.