Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) will buy a 20% stake in Yes Bank from State Bank of India (SBI) and other lenders, for about Rs 13,483 crore, making it the biggest foreign investment in country’s banking sector.

Under the deal, SMBC will acquire a 13.19% stake from SBI and total 6.81% from seven other lenders including Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank and Kotak Mahindra Bank. 

“India represents a key market for us, and we see immense long-term potential in its dynamic and fast-growing economy,” Toru Nakashima, President & Group CEO, SMFG and Akihiro Fukutome, President & Chief Executive Officer, SMBC said in statement.

SMBC is a wholly owned subsidiary of Sumitomo Mitsui Financial Group (SMFG), Japan’s second-largest banking group with total assets of $2 trillion as of December 2024.

SBI will get Rs 8,889 crore for its stake. The deal has delivered stellar returns for the country’s largest bank. In 2020 March, SBI had invested Rs 6,050 crore at Rs 10 per share for the 23.97% stake, and at Rs 21.50 per share, its stake is now valued at Rs 16,161 crore, reflecting a gain of 167% in five years — a CAGR of 22% . Since it is still holding 10.78% , there is scope for further rise in value for its stake. 

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As of Friday, HDFC Bank held a 2.75% stake in Yes Bank followed by lenders including ICICI Bank (2.39%), Kotak Mahindra Bank (1.21%), Axis Bank (1.01%), IDFC First Bank (0.92%) , Federal Bank (0.76%) and Bandhan Bank (0.70%).

Following the RBI’s suspension of Yes Bank’s board in 2020, a consortium of banks led by SBI stepped in to rescue the lender by investing Rs 10,000 crore.  As part of the bailout, SBI was allotted 6050 million shares at Rs 10 apiece. The RBI had superseded the board of Yes Bank by appointing an administrator on March 5, 2020.

“We expect to benefit from their global expertise and high governance standards. This investment is a powerful endorsement of our transformation journey and future potential,” Prashant Kumar, Managing Director & Chief Executive Officer, Yes Bank

The transaction is subject to regulatory approvals from the Reserve Bank of India, Competition Commission of India and shareholders of the Bank.

Yes Bank reported total advances worth Rs 2.46 lakh crore, and deposits worth Rs 2.84 lakh crore in the quarter ended March 2025.

Yes Bank was advised by Citigroup Global Markets Private Limited (Citi) as its financial adviser and AZB & Partners (AZB) as its legal advisor. SMBC was advised by its financial advisors JP Morgan and Jefferies and legal advisors J Sagar Associates and Anderson Mori & Tomotsune.