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Banking Blockbuster: Federal Bank’s ₹3,500 Crore Yes Bank Stake Sold to Japan’s SMBC in Power Move!

Updated: May 09, 2025 16:37

Image Source: Finance Deck
Federal Bank Ltd has made a significant strategic action by selling its entire shareholding of 16,62,73,472 shares of Yes Bank Limited to Japan's Sumitomo Mitsui Banking Corporation (SMBC) for ₹21.50 per share. The transaction, finalized under a letter agreement on May 9, 2025, is a critical juncture in the unfolding consolidation and internationalization of India's banking industry.
 
Key Highlights:
  • The board of Federal Bank gave its approval for the disposal of its entire holding in Yes Bank, i.e., more than 16.6 crore shares, to SMBC for an aggregate consideration of about ₹3,572 crore.
  • The transaction is a part of a larger, high-profile transaction where several institutional investors, with State Bank of India (SBI) as the lead, are selling their holdings in Yes Bank to SMBC. The action will prompt an open offer since SMBC's acquisition will pass the regulatory threshold for an offer to public shareholders.
  • SMBC would pay between ₹20 and ₹21.50 per share for its initial stake, a premium to Yes Bank's current market price, which reflects high hopes in the turnaround and future fortunes of the lender.
  • The deal is likely to be one of India's largest M&A banking deals, having the potential to make SMBC the largest shareholder in Yes Bank and the biggest investment by Japanese banking giant so far in India's financial landscape.
The Reserve Bank of India is reported to have given informal assurances to SMBC on regulatory approvals with an understanding that SMBC may ultimately pursue a majority holding subject to FDI and voting right regulations.
 
This sale not only releases considerable value for Federal Bank but also bolsters its capital base, while Yes Bank will gain from the strategic knowledge and international network of SMBC.
 
Sources: Economic Times, Business Upturn, The Hindu Business Line

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