Japan's SMBC completes 20% acquisition in Yes Bank, becomes top stakeholder

Japanese banking giant Sumitomo Mitsui Banking Corporation (SMBC) has completed the acquisition of a 20 per cent stake in Yes Bank through a secondary purchase of shares from State Bank of India (SBI) and other lenders, the bank said on Thursday.

 

This comes a day after the SBI announced the completion of its divestment of 13.18 per cent stake in Yes Bank to SMBC.

 

The deal makes SMBC the largest shareholder in Yes Bank, while SBI still holds around 10 per cent of the equity. Two SMBC representatives—Rajeev Veeravalli Kannan and Shinichiro Nishino—have also joined the private lender’s board.

 

 

Yes Bank said the transaction marks the single-largest cross-border investment in an Indian private sector bank. The lender intends to use SMBC’s global network to strengthen corporate banking, treasury operations and cross-border financial services, particularly in Japan–India trade.

 

“We are privileged to welcome SMBC as our largest shareholder and Board participant. I would also like to express my deepest gratitude to the Ministry of Finance, Government of India, the RBI and SBI for their unwavering support and guidance, and to the other bank investors for their timely capital participation in 2020 and continued support," said Prashant Kumar, managing director and chief executive officer (CEO), Yes Bank.

 

"With the combined sponsorship of SMBC, backed by SMFG’s global scale, and SBI, India’s most trusted bank, Yes Bank is uniquely positioned to grow stronger, expand Japan–India business flows, and deliver long-term value for all stakeholders," he added.

 

Background

 

In May, SBI and seven private sector banks that had invested in Yes Bank during its reconstruction in March 2020, decided to sell a 20 per cent stake for ₹13,482 crore to SMBC.

 

While the SBI sold a little over 13 per cent of its 24 per cent stake in the Yes Bank, the remaining 7 per cent was sold by a consortium of Indian lenders, including Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, and Kotak Mahindra Bank. These banks had picked up stakes in Yes Bank in 2020 at about ₹10 per share.

 

The deal received regulatory approval from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI) in the following months, clearing the path for the Japanese lender in the Indian market.

 

SMBC also has RBI clearance to increase its holding in Yes Bank up to 24.99 per cent. It could acquire the remaining 4.99 per cent either from private equity firms Advent and Carlyle or via a preferential share allotment by the bank, The Economic Times reported.

 

Shares of Yes Bank were down 0.4 per cent at ₹21.06 apiece on the BSE at 2:59 pm following the announcement.  (Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)