State Bank of India (SBI) has divested 13.18 percent of its stake in Yes Bank to Japan’s Sumitomo Mitsui Banking Corporation (SMBC) in a landmark transaction. This deal, valued at approximately Rs 8,889 crore, marks a significant development in Yes Bank’s restructuring journey and signals SMBC’s first major foothold in the Indian banking sector. The strategic stake sale aims to strengthen Yes Bank’s capital base while providing SBI and partner banks a lucrative exit.
Key Details of the Transaction
SBI sold 13.18% of its roughly 24% holding in Yes Bank at Rs 21.50 per share, a substantial gain over the Rs 10 per share subscription during the 2020 rescue.
SMBC is acquiring a 20 percent total stake in Yes Bank: 13.18% from SBI and 6.81% combined from seven private banks — HDFC, ICICI, Axis, Kotak Mahindra, IDFC First, Federal Bank, and Bandhan Bank.
The total deal value stands at Rs 13,483 crore, which will be booked as “other income” by the selling banks.
The deal benefits from a capital gains tax exemption under the Yes Bank Reconstruction Scheme, 2020 to encourage banks that supported the rescue.
Necessary regulatory approvals from the Reserve Bank of India (RBI) and Competition Commission of India (CCI) have been secured.
Post-sale, SBI’s stake will reduce to about 10.8%, while other banks’ combined holdings will fall below 3%.
Strategic Implications and Future Prospects
SMBC’s entry as a major stakeholder brings not only capital infusion but also global banking expertise to Yes Bank. With RBI approval, SMBC can appoint two directors on Yes Bank’s board, enhancing governance and operational oversight. Additionally, SMBC is reportedly planning a further capital injection of Rs 16,000 crore in a mix of equity and debt to boost Yes Bank’s growth trajectory.
SBI and the consortium of private banks stand to benefit significantly from this exit, booking substantial tax-free income, providing relief amid margin pressures and treasury gains moderation. This also underscores the success of the 2020 reconstruction efforts, where banks played a key role in stabilizing Yes Bank.
Market and Regulatory Context
The transaction, one of the largest cross-border deals in India’s banking sector, signals renewed confidence from international investors in the Indian market. The tax exemption clause in the Reconstruction Scheme was pivotal in encouraging banks to invest initially and now exit at gains without a capital gains tax burden.
Yes Bank’s shares responded positively to the announcement, reflecting market optimism on fresh capital and strategic partnership bolstering stability and growth prospects.
Looking Ahead
This strategic stake sale sets the stage for accelerated expansion and risk management improvements at Yes Bank, backed by a strong capital base and global banking acumen from SMBC. The partnership could serve as a template for further globalization of the Indian banking landscape and deepen Indo-Japanese financial ties.
Sources: Economic Times, Business Standard, Reuters, News18, Angel One, Business Today, RBI Filings
