Marking the largest cross-border transaction in India’s banking sector, Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) has entered into a definitive agreement to acquire 20 per cent stake in YES Bank through a secondary stake purchase of 13.19 per cent from State Bank of India (SBI), and another 6.81 per cent stake from other bank shareholders including Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank and Kotak Mahindra Bank.
SBI will sell a 13.19 per cent stake in YES Bank at ₹21.50 per equity share for ₹8,889 crore. SBI’s shares ended trading 1 per cent higher at ₹779.40 apiece on the BSE, while YES Bank shares ended 10 per cent higher at ₹20 apiece. SBI and the seven investor banks had invested in the private lender as part of the YES Bank Reconstruction Scheme in March 2020. After this transaction, SBI will continue holding over 10 per cent stake in YES Bank. It held a 23.97 per cent stake in YES Bank as of March end.
This transaction is subject to regulatory approvals from the Reserve Bank of India (RBI) and the Competition Commission of India. SMBC, a wholly owned subsidiary of Sumitomo Mitsui Financial Group, is the second largest banking group in Japan with total assets of $2 trillion as of December 2024. It also has an India presence via its wholly-owned subsidiary SMFG India Credit.
Prashant Kumar, MD & CEO, YES Bank said that SMBC’s investment marks a significant step in the bank’s next growth phase. “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,” he said.
YES Bank was advised by Citigroup Global Markets as its financial adviser and AZB & Partners (AZB) as its legal advisor, while SMBC was advised by its financial advisors J.P. Morgan and Jefferies and legal advisors J. Sagar Associates (JSA) and Anderson Mori & Tomotsune.
The rescue act
SBI in 2020 invested ₹6,050 crore to acquire 49 per cent stake in Yes Bank, as part of a rescue plan for the troubled lender. However, its shareholding fell after private equity firms Carlyle and Advent invested in the bank in 2022.
According to the YES Bank resolution plan in 2020, then HDFC Ltd and ICICI Bank invested ₹1,000 crore each, Axis Bank invested ₹600 crore, Kotak Mahindra Bank ₹500 crore, Bandhan Bank & Federal Bank ₹300 crore each, and IDFC First Bank ₹250 crore in the bank.
This rescue act, crafted by the RBI, saved depositors’ interest—the regulator’s most important goal—and trust in India’s banking system.