Sumitomo Mitsui Reportedly Eyes 51% Stake in Yes Bank Amid Conflicting Signals
|2025-05-06
Last year, reports also indicated that Japan's Sumitomo Mitsui Banking Corporation (SMBC) and Dubai-based Emirates NBD were in advanced discussions to acquire a majority stake in YES Bank.
Sumitomo Mitsui may acquire a 51% stake in India's Yes Bank, but conflicting reports raise uncertainty over RBI approval and deal progress.
Shares in Mumbai-based Yes Bank rose sharply by as much as 9.6% on Tuesday following widespread media reports that Sumitomo Mitsui Banking Corporation had secured the Reserve Bank of India’s (RBI) approval to acquire a controlling stake. However, multiple sources close to the matter have since refuted these claims, stating that no formal application is currently pending with the central bank.
The Japanese financial giant, a unit of Sumitomo Mitsui Financial Group and Japan’s second-largest bank, has been in talks with Yes Bank’s largest shareholder, the State Bank of India (SBI), and Indian regulatory authorities for several months. According to sources cited by Reuters and domestic Indian media outlets, SMBC is seeking to acquire up to 51% of the private lender, a move that would represent one of the largest foreign takeovers in India’s banking sector.
If the deal is completed, it would potentially trigger a mandatory open offer for an additional 26% under Indian takeover regulations. Despite these developments, a senior banking source told Indian news agency PTI that “reports of RBI approval for SMBC to buy a stake in Yes Bank are incorrect.”
Yes Bank Responds to Speculation
In a filing with the National Stock Exchange, Yes Bank described the current media reports as “speculative” and stated that any ongoing discussions with stakeholders are preliminary and do not warrant disclosure under existing regulations.
“The Bank is on a growth trajectory and routinely explores opportunities with various stakeholders aimed at enhancing shareholder value,” it said. “However, such discussions are preliminary and not factually correct at this stage.”
Despite this clarification, Yes Bank's stock closed 1.5% higher on Tuesday at ₹17.98, after retreating from its intraday peak.
Ongoing Negotiations with SBI and Other Shareholders
As of March 2025, SBI holds a 24% stake in Yes Bank, which it acquired during a 2020 restructuring coordinated by the RBI following the lender’s liquidity crisis. Several private institutions, including HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank, also collectively hold over 11% of the bank, while retail investors own approximately 22.5%.
According to reports from The Economic Times and Moneycontrol, SMBC executives recently held meetings in Mumbai with SBI and other key stakeholders to finalise deal terms. While no public confirmation has been issued by SMBC or the RBI, sources familiar with the matter said that the central bank has given a “verbal comfort” for a potential transaction structure.
However, regulatory constraints remain a key hurdle. Current RBI norms limit foreign ownership voting rights in private Indian banks to 26%, even if the equity holding is higher.
Context: Challenges in Foreign Bank Takeovers in India
Foreign takeovers in India’s banking sector are relatively rare due to stringent regulatory restrictions and high state ownership. The most notable precedent is the 2020 acquisition of Lakshmi Vilas Bank by Singapore’s DBS Group.
If successful, SMBC’s acquisition would mark the largest foreign-led banking transaction in India to date. The Japanese bank’s previous investments in the country include a 2021 acquisition of a majority stake in Fullerton India Credit Company for $2 billion.
Yes Bank has undergone a significant turnaround since its 2020 rescue. Total deposits have surged to ₹2.85 trillion, while non-performing assets have declined sharply. In the financial year ending March 2025, the bank posted a net profit of ₹2,406 crore, up 93% year-on-year.
The leadership of Yes Bank may also be on the cusp of change. Chief Executive Officer Prashant Kumar is set to complete his term in October, and reports suggest that SMBC may recommend candidates for the role if the acquisition proceeds.
Conclusion
Despite heightened investor interest and market speculation, the fate of the potential acquisition remains uncertain. With no official regulatory filing submitted and conflicting accounts from involved parties, it remains unclear when — or if — a definitive agreement will be reached.
The Japanese financial giant, a unit of Sumitomo Mitsui Financial Group and Japan’s second-largest bank, has been in talks with Yes Bank’s largest shareholder, the State Bank of India (SBI), and Indian regulatory authorities for several months. According to sources cited by Reuters and domestic Indian media outlets, SMBC is seeking to acquire up to 51% of the private lender, a move that would represent one of the largest foreign takeovers in India’s banking sector.
If the deal is completed, it would potentially trigger a mandatory open offer for an additional 26% under Indian takeover regulations. Despite these developments, a senior banking source told Indian news agency PTI that “reports of RBI approval for SMBC to buy a stake in Yes Bank are incorrect.”
Yes Bank Responds to Speculation
In a filing with the National Stock Exchange, Yes Bank described the current media reports as “speculative” and stated that any ongoing discussions with stakeholders are preliminary and do not warrant disclosure under existing regulations.
“The Bank is on a growth trajectory and routinely explores opportunities with various stakeholders aimed at enhancing shareholder value,” it said. “However, such discussions are preliminary and not factually correct at this stage.”
Despite this clarification, Yes Bank's stock closed 1.5% higher on Tuesday at ₹17.98, after retreating from its intraday peak.
Ongoing Negotiations with SBI and Other Shareholders
As of March 2025, SBI holds a 24% stake in Yes Bank, which it acquired during a 2020 restructuring coordinated by the RBI following the lender’s liquidity crisis. Several private institutions, including HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank, also collectively hold over 11% of the bank, while retail investors own approximately 22.5%.
According to reports from The Economic Times and Moneycontrol, SMBC executives recently held meetings in Mumbai with SBI and other key stakeholders to finalise deal terms. While no public confirmation has been issued by SMBC or the RBI, sources familiar with the matter said that the central bank has given a “verbal comfort” for a potential transaction structure.
However, regulatory constraints remain a key hurdle. Current RBI norms limit foreign ownership voting rights in private Indian banks to 26%, even if the equity holding is higher.
Context: Challenges in Foreign Bank Takeovers in India
Foreign takeovers in India’s banking sector are relatively rare due to stringent regulatory restrictions and high state ownership. The most notable precedent is the 2020 acquisition of Lakshmi Vilas Bank by Singapore’s DBS Group.
If successful, SMBC’s acquisition would mark the largest foreign-led banking transaction in India to date. The Japanese bank’s previous investments in the country include a 2021 acquisition of a majority stake in Fullerton India Credit Company for $2 billion.
Yes Bank has undergone a significant turnaround since its 2020 rescue. Total deposits have surged to ₹2.85 trillion, while non-performing assets have declined sharply. In the financial year ending March 2025, the bank posted a net profit of ₹2,406 crore, up 93% year-on-year.
The leadership of Yes Bank may also be on the cusp of change. Chief Executive Officer Prashant Kumar is set to complete his term in October, and reports suggest that SMBC may recommend candidates for the role if the acquisition proceeds.
Conclusion
Despite heightened investor interest and market speculation, the fate of the potential acquisition remains uncertain. With no official regulatory filing submitted and conflicting accounts from involved parties, it remains unclear when — or if — a definitive agreement will be reached.
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