Japanese banking major Sumitomo Mitsui Banking Corporation (SMBC) is reportedly in the final stages of acquiring a significant stake in YES Bank, potentially marking its largest investment in India to date. According to reports by The Economic Times, the acquisition is being coordinated with the State Bank of India (SBI), which currently holds a 24 per cent stake in YES Bank and has been exploring long-term strategic partnerships following the private lender’s revival since its 2020 rescue.
Sources indicate that senior executives from SMBC met with SBI officials and other stakeholders in Mumbai last week to finalise the contours of the deal. If successful, this would surpass SMBC’s earlier 2 billion dollars investment in Fullerton India Credit Company in 2021, where it had acquired a 74.9 per cent stake.
Although CNBC-TV18 noted that SMBC has yet to file a formal application with the Reserve Bank of India (RBI) to acquire YES Bank shares, regulatory assurances have reportedly been given. The RBI has verbally conveyed support for SMBC’s plan to acquire a controlling 51 per cent stake, although voting rights will remain capped at 26 per cent under existing norms. Similar regulatory leniencies were granted during Fairfax’s acquisition of Catholic Syrian Bank and DBS’s takeover of Lakshmi Vilas Bank.
If the 51 per cent stake purchase materialises, SMBC will be required to make a mandatory open offer for up to 26 per cent of YES Bank’s equity, as per Indian takeover regulations. The transaction would make SMBC the largest shareholder in YES Bank. However, it remains uncertain whether other major investors, such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, LIC, Carlyle, and Advent International, will continue to hold their stakes or exit.
In anticipation of the acquisition, SMBC has already restructured its operations, carving India out as a separate operating region. Rajeev Kannan, the bank’s Asia Pacific Co-Head, will now report directly to SMBC’s Tokyo headquarters. A long-term plan to merge YES Bank with SMBC’s India operations is also being considered, although it is likely to take shape in later phases.
ALSO READ: Zalando Surpasses Q1 Revenue Expectations, Reaffirms 2025 Target
Meanwhile, YES Bank CEO Prashant Kumar is expected to step down upon the completion of his term in October. If the acquisition is completed, SMBC is expected to nominate candidates for the top executive role, subject to RBI’s approval.
YES Bank continues to demonstrate steady growth, with deposits reaching Rs 2.85 trillion in FY25, 2.7 times higher than in March 2020. The bank’s strategy going forward remains focused on strengthening its retail and SME lending portfolio, which currently comprises around 60 per cent of its loan book.
FIRST Business Portal addressing the potential of business capability of North East Region.
