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SMBC in Advanced Talks to Acquire Stake in Yes Bank, Potentially Triggering Open Offer

Updated: May 06, 2025 09:28

Image Source: Wikipedia
Japan's Sumitomo Mitsui Banking Corp (SMBC) is in advanced negotiations to buy a major stake in India's Yes Bank, based on reports from the Economic Times. The acquisition, which has been under negotiations for months, has the potential to result in one of India's biggest private banking deals. Here's the detailed analysis:
 
SMBC's Stake Acquisition Plans
  • SMBC is in talks to buy a controlling stake, possibly 51% of Yes Bank.
  • The action may lead to a mandatory open offer for another 26% of the bank's equity under Indian regulatory guidelines.
State Bank of India's (SBI) Role in the Deal
  • SBI now owns 24% in Yes Bank and has been looking for a long-term acquirer after the bank's turnaround since its rescue in 2020.
  • SBI officials met with SMBC’s senior leadership in Mumbai last week to finalize terms.
Regulatory Approvals & RBI’s Position
  • The Reserve Bank of India (RBI) has reportedly given verbal assurance that SMBC will be allowed to retain a majority economic stake in Yes Bank.
  • However, voting rights will remain capped at 26%, as per RBI’s existing regulations.
Market Impact & Institutional Investors
  • Aside from SBI, other institutional investors like HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, LIC, Carlyle, and Advent International can also leave their stakes.
  • Total deposits at Yes Bank have risen to ₹2.85 trillion in FY25, almost three times the level since March 2020.
Future Outlook & Strategic Expansion
  • This would be SMBC's biggest bet in India if it goes through, beating its $2 billion buyout of Fullerton India Credit in 2021.
  • SMBC has already established India as a standalone operating area, with Rajeev Kannan, SMBC's co-head of Asia Pacific, now reporting directly to Tokyo.
This potential acquisition represents a significant change in India's banking industry, demonstrating SMBC's dedication to expanding its presence in the country.
 
Sources: Economic Times, Business Standard, Financial Express

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