Yes Bank Shares Drop 1.9% as SMBC Declines to Increase Stake Further

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Yes Bank shares fell 1.9% after SMBC announced it would not increase its stake beyond 24.99%, despite earlier enthusiasm. The bank’s strong growth in deposits and loans, coupled with strategic partnerships, maintains optimism about its recovery, though short-term volatility persists amid cautious investor sentiment.

Share Price Movement: Shares of Yes Bank declined by 1.9%, reflecting market caution following SMBC’s announcement.

SMBC’s Stake Stance: Sumitomo Mitsui Banking Corporation (SMBC), the largest foreign investor in Yes Bank, has explicitly stated it has no plans to increase its stake beyond the current approximately 24.22%, staying within the regulatory limit of 24.99%.

Regulatory Context: Under Indian law, crossing the 25% threshold triggers a mandatory open offer, which SMBC wishes to avoid, thus maintaining its current position.

Historical Deal Details: SMBC’s acquisition involved purchasing shares from a consortium of Indian banks, including State Bank of India, HDFC Bank, and others, at Rs 21.50 per share, marking the largest cross-border investment in an Indian private bank.

Market Reaction: The stock had surged over 10% earlier, hitting a 52-week high of Rs 24.30, driven by optimistic investor sentiments about the bank’s recovery and SMBC’s strategic involvement.

Current Financial Health: Yes Bank has shown positive signs of growth—deposits increased by 7.9% YoY to Rs 2,96,831 crore, and loans rose by 3.9% QoQ to Rs 2,50,586 crore, with asset quality improving.

Future Outlook: The Reserve Bank of India (RBI) approved SMBC’s stake, allowing it to hold up to 24.99% for one year, with potential additional stake acquisition subject to regulatory approval.

Strategic Partnership: Despite the stake cap, SMBC remains committed to collaborating with Yes Bank to strengthen corporate banking, treasury, and cross-border financial services, especially in enhancing Indo-Japanese trade.

Investor Sentiment: While short-term stock dips indicate profit-taking, the overall outlook remains cautiously optimistic, given the bank’s improving financial metrics and strategic partnership with SMBC.

Upcoming Financials: Yes Bank’s quarterly earnings due on October 18 will be closely scrutinized for further signs of recovery and growth.

Sources: Economic Times, CNBC-TV18, Business Today, Moneycontrol

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