The proposed stake sale of Yes Bank has hit a regulatory wall as the Reserve Bank of India (RBI) is not comfortable giving a majority stake to a foreign financial institution, a source close to the developments said.
Earlier reports had suggested the bank’s stake sale would go through in the last quarter of FY25.
Japanese lender Sumitomo Mitsui Banking Corp (SMBC) and Dubai-based Emirates NBD have shown keen interest in acquiring a majority stake of over 51% in Yes Bank. Sumitomo Mitsui is a unit of Sumitomo Mitsui Financial Group, Japan’s second-biggest bank.
SMBC has been directly negotiating with the RBI on this, the source said, but the regulator is not willing to relent on ownership control.
According to sources, both the bidders are interested in acquiring a 51% stake in Yes Bank and hold it perpetually. However, as per the bank licensing norms, promoters should reduce their stake to 26% within 15 years of starting operations.
Due to this stand-off, sources said, the board members of State Bank of India (SBI) are yet to take up the stake sale proposal as there is no clarity on the timeline.
On Thursday, Yes Bank’s shares closed 1.7% lower at Rs 23.43 on the BSE.
The regulator restructured Yes Bank in March 2020 with the help of a consortium of local banks owing to its deteriorating financial health. According to media reports, SBI has put its 24% stake in Yes Bank on the block. Other banks, including Axis Bank, Kotak Mahindra Bank, ICICI Bank, and HDFC Bank, collectively own 7.4%. PE investors Carlyle and Advent collectively own about 14%.
Yes Bank had reported a standalone net profit of Rs 502.43 crore for the quarter ended June 30, up by 47% on year. The net profit was up by 11.2% on a quarterly basis, while the net interest margin (NIM) was steady at 2.4%.