12 May , 2025 By : Debdeep Gupta
Private lender Yes Bank shares soared nine percent during the opening deals on Monday, May 12, after Japan’s Sumitomo Mitsui Banking Corporation (SMBC) agreed to acquire a 20 percent stake in Yes Bank, marking one of the largest foreign investments in an Indian private bank.
"This transaction is the largest cross-border investment in the Indian banking sector. The transaction is subject to the necessary regulatory and statutory approvals including from the Reserve Bank of India and Competition Commission of India and will be subject to customary closing conditions," said Yes Bank in a stock exchange filing.
The transaction is a significant milestone to drive Yes Bank’s next phase of growth, profitability and value creation and we expect to leverage SMBC’s global expertise in this phase, said the Mumbai-headquartered private lender.
At 9.35 am, Yes Bank's stock price was quoting Rs 20.69 per share, higher by 3.4 percent on the NSE after cooling from the opening highs.
Japan's Sumitomo Mitsui Banking Corp will acquire the shares through a secondary stake purchase of 13.19 percent from SBI and 6.81 percent percent aggregate stake from other banks for Rs 13,483 crore at Rs 21.5 per share.
The transaction also involves SMBC purchasing shares from a group of Indian banks including HDFC Bank, ICICI Bank, IDFC First Bank, Federal Bank, Bandhan Bank, Axis Bank, and Kotak Mahindra Bank. These banks had originally invested in Yes Bank at around Rs 10 per share during its reconstruction phase in 2020.
SMBC buying at Rs 1.50 per share, these investors are potentially set to make substantial gains of approximately 115 percent over five years, translating to an annual return of over 20 percent. For SBI, this deal is expected to boost its profits by 7.5 percent in the fiscal year 2026 and free up capital that was previously reserved against its exposure to Yes Bank.
The Reserve Bank of India (RBI) currently caps foreign ownership in private banks at 15 percent, with a 26 percent ceiling on voting rights. SMBC’s 20 percent stake purchase is notable because it exceeds the typical threshold allowed for foreign banks, though the RBI has made exceptions in the past for banks in distress to maintain financial stability.
Looking ahead, the deal is subject to approvals from the RBI and other regulatory bodies. SBI will continue to hold a significant stake in Yes Bank.
0 Comment