SMBC's board representation in Yes Bank to be proportionate to its stake

SMBC to gain 20 per cent stake in Yes Bank, becoming its largest shareholder with likely board representation; SBI's stake to reduce post regulatory approval

Following Japan-based Sumitomo Mitsui Banking Corporation’s (SMBC) proposed acquisition of a 20 per cent stake in Yes Bank -- subject to approval from the Reserve Bank of India (RBI) -- the Japanese lender is set to become the bank’s largest shareholder and is expected to gain board representation proportional to its shareholding, sources said.

 

While Yes Bank has not officially disclosed any changes to its board structure post-deal, sources indicated that SMBC is likely to have the highest representation on the board once the transaction is finalised.

 

Moreover, SBI will be free to cut down its stake in the private bank once the deal sails through, said a source aware of the developments. Yes Bank, however, did not give a timeline on when the regulatory approval would come.

 

Currently, Yes Bank’s board has two nominee directors from the State Bank of India (SBI), currently its largest shareholder with a 23.97 per cent stake. According to sources, the representation of SBI in Yes Bank’s board will come down to one.

 

Other members of Yes Bank’s board include a nominee director from Verventa Holdings; Prashant Kumar, MD & CEO of Yes Bank; Ranjan Pental and Manish Jain, both executive directors; and four independent directors. Former RBI deputy governor R Gandhi serves as the bank’s non-executive, part-time chairman.

 

Also, sources also indicated that SMBC has the financial capacity to increase its stake in Yes Bank to 25 per cent, which would trigger an open offer, potentially allowing the Japanese lender to raise its stake further. However, it remains unclear whether SMBC intends to pursue that route to acquire a majority stake in the bank as the regulator may not be comfortable with such a move. 

 

SBI is selling a 13.19 per cent stake in Yes Bank at ₹21.50 per equity share, which is at 18 per cent premium to the lender’s closing share price on Thursday. SBI will hold a residual 10.78 per cent stake in the bank, and it would be free to divest its remaining stake once the proposed deal receives regulatory approval and is finalised, the source quoted above said.

 

“SMBC was negotiating with SBI and other investors. And this is finally they ended up (on the premium),” said another source aware of the developments.

 

“Different structures were being evaluated and this structure (20 per cent stake) made the most sense to the bank, to the buyer and to the regulator. It married all objectives,” the second source added.

 

Sumitomo Mitsui Financial Group (SMFG), whose wholly owned subsidiary SMBC is acquiring a 20 per cent stake in Yes Bank, also operates a non-banking finance company (NBFC) in India, SMFG India Credit. Sources indicated that while there are currently no plans to merge the NBFC with Yes Bank, such options could be explored by stakeholders in the future. 

Looking back: Yes Bank crisis and recovery attempts

SMBC on Friday said it will acquire a 20 per cent stake in Yes Bank for ₹13,482 crore. 

State Bank of India and other private sector lenders who had invested in the bank during its rescue collectively will sell stake in the bank. SBI will be offloading 13.19 per cent stake in Yes Bank for ₹8,889 crore at ₹21.50 per equity share, which is at 18 per cent premium to the lender’s closing share price on Thursday.  The deal values the private sector lender at $7.9 billion.

 

Oct  2018: RBI refuses extension to Rana Kapoor as MD & CEO

Feb  2019: Rana Kapoor’s reign as MD & CEO of Yes Bank ends

Mar  2019: Ravneet Gill takes charge as MD & CEO of Yes Bank

Mar  2020: RBI supersedes Yes Bank’s board and places it under moratorium

Mar  2020: RBI announced Yes Bank’s reconstruction with SBI and other major pvt lender investing in the rescue

* SBI and other private sector lenders put in over ₹10,000 crore to rescue the bank

Jul  2020: Yes Bank raises equity capital of ₹15,000 crore through a follow-on public offer

Dec  2022: Carlyle, Advent pick up stake in Yes Bank for ₹8,896 crore

May 2025: SMBC to acquire 20% stake in Yes Bank for ₹13,482 crore, subject to regulatory approvals