Yes Bank is in the spotlight today as reports suggested that Japanese giant Sumitomo Mitsui Banking Corp. (SMBC) is inching closer to buying a stake in the private lender. The talks, which have been going on for several months, now appear to be reaching a final stage, potentially setting the stage for one of the biggest banking deals in India.
According to an Economic Times report citing people aware of the matter, SMBC could end up acquiring a 51% stake in Yes Bank. This would not only make it the largest shareholder but also trigger an open offer for an additional 26%. If that happens, this would be the largest-ever M&A deal in India’s banking space.
The development comes after years of Yes Bank trying to turn the page following its dramatic fall and subsequent rescue in 2020, orchestrated by the Reserve Bank of India. Since then, the State Bank of India (SBI) has held a 24% stake in the bank and has been quietly scouting for a long-term investor to take over.
As per the Economic Times report, apart from SBI, it is unclear which of the other investors including HDFC Bank, ICICI Bank, LIC, and global private equity players like Advent and Carlyle will also look to sell their holdings.
The RBI factor and what is at stake
Foreign ownership in Indian private banks is tightly regulated. FDI rules cap overseas ownership a t 74%, with each foreign entity limited to a 15% stake.
As per the Economic Times report, even if SMBC does get the green light to buy a majority stake, RBI is unlikely to allow full voting rights. As per current norms, foreign investors cannot exceed 26% in voting power, even if they own more.
Yes Bank: From crisis to comeback
It is not just about ownership. Yes Bank has come a long way since the hard days of 2020. The total deposits have now surged to Rs 2.85 lakh crore, nearly triple from where they stood at the time of the rescue. Its bad loans have fallen drastically too. Gross NPAs are down to 1.6% and net NPAs at just 0.3%.
The bank posted a net profit of Rs 2,406 crore in FY25, marking a whopping 93% jump over the previous year. Compare that to FY20 when it had logged a jaw-dropping loss of over Rs 16,000 crore.
Yes Bank issues clarification
Amid these reports, Yes Bank issued a clarification today through an exchange filing regarding the matter. In the filing, the lender said, “The Bank is on a growth trajectory and routinely explores opportunities with various stakeholders, which are aimed at enhancing shareholder value. However, such discussions are preliminary and do not warrant a disclosure under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, at this stage.”