Japan’s Sumitomo Mitsui Banking Corporation (SMBC) will acquire a 20% stake in Yes Bank for ₹13,482 crore, marking the largest-ever cross-border investment in India’s banking sector.
Key Highlights
- SMBC will buy shares at ₹21.50 apiece, valuing Yes Bank at $7.9 billion.
- Stake acquisition:
- 13.19% from State Bank of India (SBI)
- 6.81% from other private bank shareholders
- SBI and other banks entered Yes Bank in 2020 as part of a rescue package led by the RBI.
- This stake sale offers a partial exit route for SBI and helps Yes Bank strengthen its strategic position with a global partner.
- Yes Bank stands to benefit from SMBC’s A1 / A- credit rating, which may reduce the cost of funds.
Impact and Future Plans
- SMBC aims to increase stake over time, possibly triggering an open offer, though voting rights capped at 26% (as per RBI rules).
- SMBC to get 2 board seats in Yes Bank.
- SMBC may merge its NBFC arm, SMFG India Credit, and a proposed wholly owned banking subsidiary into Yes Bank in the future.
- The Yes Bank brand may or may not be retained if SMBC gains a controlling stake.
Regulatory Context & Background
- RBI approval is mandatory for any entity acquiring over 10% stake in an Indian bank.
- SBI currently holds 23.99%, down from 49% post-2020 restructuring.
- Other banks’ current holdings in Yes Bank:
- HDFC Bank – 2.75%
- ICICI Bank – 2.39%
- Kotak Mahindra Bank – 1.21%
- Axis Bank – 1.01%
- The 2020 restructuring plan included a ₹10,000 crore capital infusion by SBI, LIC, and other lenders under RBI supervision.
About SMBC
- SMBC is a wholly owned subsidiary of Sumitomo Mitsui Financial Group (SMFG), Japan’s second-largest banking group.
- Total assets: $2 trillion (as of December 2023).
- Operates in: India since 2013 with branches in Delhi, Mumbai, and Chennai.
- Past India investments:
- 4.5% stake in Kotak Mahindra Bank (exited in March 2024)
- 100% ownership of Fullerton India (initially acquired 74.9% in 2021)