Japanese financial powerhouse Sumitomo Mitsui Banking Corporation (SMBC) is set to acquire a 20% stake in YES Bank for Rs 13,482 crore, purchasing shares from the State Bank of India (SBI) and seven other private banks. This development comes as a major strategic move for the embattled private lender.
SBI, which currently holds a 24% stake in YES Bank, along with HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank, and Bandhan Bank, had invested in YES Bank during its 2020 reconstruction phase. The stake sale is priced at Rs 21.50 per share.
Following the deal, SMBC will gain board representation with the right to nominate two non-executive directors. SBI’s board representation will be reduced from two to one non-executive, non-independent director.
SMBC’s Entry Seen as Strategic Support
The acquisition is expected to bring long-term strategic strength and capital to YES Bank. Global rating agency Moody’s called the development “credit positive,” highlighting SMBC’s strong balance sheet and its potential to support YES Bank’s future growth. SMBC’s parent, Sumitomo Mitsui Financial Group (SMFG), already operates SMFG India Credit—one of the country’s largest NBFCs—and plans to classify YES Bank as an equity-method affiliate following the acquisition.
The transaction is pending regulatory approvals from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI). While RBI generally caps foreign ownership in Indian banks at 15%, it has occasionally made exceptions in cases of stressed lenders.
Market Reaction & Analyst Outlook
YES Bank’s stock has risen over 21% in just five trading sessions, driven by investor optimism around the SMBC deal. The share price touched Rs 21.52 on Wednesday, lifting the bank’s market capitalization to nearly Rs 68,000 crore.
Despite the surge in share price, some brokerage houses remain cautious. Kotak Institutional Equities, in a note, stated that the acquisition does not resolve YES Bank’s underlying business concerns. The brokerage retained a ‘sell’ rating with a target price of Rs 17, citing a lack of profitability and below-average growth metrics compared to industry peers.
“While strategic support is welcome, the bank still needs to improve core fundamentals. Structural concerns persist,” the report noted.
Search for New Leadership
In parallel, YES Bank has reportedly begun the hunt for a new CEO. According to Moneycontrol, the board has engaged global executive search firm Egon Zehnder to identify potential candidates, signaling a leadership transition amid the stake sale.
As YES Bank undergoes this transformation, the SMBC deal may mark a new chapter—but analysts and investors alike will be watching closely to see whether the change in shareholding translates into a turnaround in performance.
