In what could be the largest cross-border investment in the banking sector, Sumitomo Mitsui Banking Corporation (SMBC) of Japan has entered into an agreement to acquire 20 per cent stake in YES Bank through a secondary stake purchase valued at around Rs 13,483 crore.
SMBC has agreed to purchase 13.19 per cent stake from SBI at a cost of Rs 8,889 crore and 6.81 per cent from other bank shareholders including Axis Bank, Bandhan Bank, Federal Bank, , ICICI Bank, IDFC First Bank and . While SMBC paid a price of Rs 21.50 per share, Yes Bank shares zoomed by 9.77 per cent to Rs 20 on the exchanges on Friday.
SBI and the seven investor banks had invested in Yes Bank as part of a Reconstruction Scheme approved by the Reserve Bank of India in March 2020. “This transaction is the largest cross-border investment in the Indian banking sector,” the bank said.
SBI will continue to hold more than 10 per cent stake in Yes Bank after the deal. The RBI had on March 5, 2020, put a moratorium on Yes Bank, which faced a financial crisis, restricting withdrawals to Rs 50,000 per depositor. It superseded the board of the troubled private sector lender and appointed Prashant Kumar as administrator.
SMBC is a wholly-owned subsidiary of Sumitomo Mitsui Financial Group, Inc. (SMFG), which is the second largest banking group in Japan with total assets of US $ 2 trillion as of December 2024 with strong global presence. SMFG is listed on the Tokyo Stock Exchange Premier Market of the Nagoya Stock Exchange and SMFG’s American Depositary Receipts (ADRs) are also listed on the New York Stock Exchange.
SMBC is among the leading foreign banks in India and SMFG’s wholly owned subsidiary, SMFG India Credit Company Limited, is among the largest diversified NBFCs in India. The transaction is a significant milestone to drive YES Bank’s next phase of growth, profitability and value creation and we expect to leverage SMBC’s global expertise in this phase.
Yes Bank reported a net profit of Rs 612 crore during the quarter ended December 2024. It has a deposit base of Rs 2.84 lakh crore.
“We thank SBI for its stewardship since becoming largest shareholder in 2020 and expect to work closely with both SMBC and SBI in this next phase of growth. We also thank the government, the RBI and other investor banks for their guidance and support during and post the Reconstruction of the Bank,” Yes Bank said.
Prashant Kumar, Managing Director & Chief Executive Officer, YES Bank said, “we expect to benefit from their global expertise and high governance standards. This investment is a powerful endorsement of our transformation journey and future potential. Over the past few years, our growth has been shaped by the strong partnership and unwavering support of SBI and they will continue to remain a valued stakeholder.”
“India represents a key market for us, and we see immense long-term potential in its dynamic and fast-growing economy. This investment aligns with our commitment to building lasting, value driven relationships in the region. We look forward to working closely with the team as a major shareholder in their next phase of growth,” Toru Nakashima, President & Group CEO, SMFG and Akihiro Fukutome, President & CEO, SMBC said.
RBI superseded Yes Bank in 2020
The Reserve Bank of India (RBI) superseded the board of on March 5, 2020, due to a serious deterioration in its financial position. The RBI action was accompanied by a moratorium on the bank, restricting withdrawals to Rs 50,000 per account. The RBI also appointed Prashant Kumar, former CFO of State Bank of India, as the administrator, and approved a Reconstruction Plan involving SBI and seven other banks. Kumar later became the MD of the bank.
The RBI cited the bank’s inability to raise capital and address potential loan losses, which led to downgrades and deposit withdrawals. Moreover, governance issues also played a role.
The bank was originally promoted by Rana Kapoor and Ashok Kapur. Between 2004, when it was launched, and 2015, Yes Bank was one of the buzziest banks. In 2015, UBS, a global financial services company, raised the first red flag about its asset quality. The UBS report stated that had loaned more than its net worth to companies that were unlikely to pay back.
