Yes Bank Gets a Japanese Lifeline: SMBC’s Bold 20% Stake Signals New Era

Image Source: Startup Talky

Japan's Sumitomo Mitsui Banking Corporation (SMBC) officially approached the Competition Commission of India (CCI) to seek clearance for acquiring a 20% stake in India's largest cross-border banking investment so far, Yes Bank. The strategic investment of ₹13,483 crore ($1.58 billion) will make SMBC the biggest individual holding in the Mumbai-based Yes Bank pending regulatory clearances by the CCI and Reserve Bank of India (RBI).

Key Points:

Deal Structure:

SMBC will buy a 13.19% stake from State Bank of India (SBI) at ₹8,889 crore.
The remaining 6.81% will be provided by seven other banks—Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, and Kotak Mahindra Bank—at ₹4,594 crore.
Post-deal, SBI's holding in Yes Bank will reduce from 24% to a little over 10%.

Strategic Implication:

SMBC, which is owned by Japan's second-largest banking group, Sumitomo Mitsui Financial Group (SMFG), will have significant ownership, including the power to nominate two directors on the board of Yes Bank.
The transaction is Yes Bank's comeback after its crisis in 2020 and is a sign of new foreign investor optimism for India's private banking sector.
Moody's has described the acquisition as "credit positive" in assigning long-term strategic support and better governance to Yes Bank.

Financial Performance:

Yes Bank reported a 63% increase in standalone net profit to ₹738 crore in Q4 FY25, with the year's profit doubling to ₹2,406 crore in FY25.

Regulatory Notes:

The transaction is subject to RBI and CCI clearance. RBI limits foreign banking company ownership to 15% in normal cases, but for troubled banks, as in the present scenario.

Sectoral Significance:

This transaction establishes a new standard for foreign deals in Indian banking and will further deepen economic and financial relations between India and Japan.

Source: The Economic Times, Global Finance Magazine, Rediff Money, Business Standard, INDmoney