A potential game-changing move in India’s banking sector sees YES Bank’s stock jump on renewed SMBC-SBI deal rumors.
In a surprising turn of events, YES Bank’s shares surged over 9% on Tuesday morning, fueled by reports that Japan’s Sumitomo Mitsui Banking Corporation (SMBC) has re-entered negotiations to acquire a controlling stake in the Mumbai-based private lender. However, much of the initial rally cooled off by the afternoon session, leaving investors on edge.
SBI Reopens Strategic Exit Talks with SMBC
According to sources cited by Moneycontrol, State Bank of India (SBI) has resumed talks with SMBC to divest a significant portion of its 23.97% stake in YES Bank. Insiders suggest that SBI could offload up to 20% of its holding, opening the door for SMBC to gain a substantial controlling position.
This development could signal a long-anticipated exit strategy for SBI and other banks like Axis Bank, Kotak Mahindra Bank, and HDFC Bank, which had rescued YES Bank in 2020 during a central bank-imposed reconstruction following a severe liquidity crisis.
YES Bank’s Shares Cool After Initial Surge
YES Bank’s shares, which peaked in the early hours of May 6 on the National Stock Exchange, were trading at Rs 18.04 per share by 1:30 PM, reflecting a modest 1.8% gain. The cooling was triggered after reports of RBI’s approval to SMBC were dismissed as inaccurate.
The Reserve Bank of India (RBI) has not granted any formal approval to the Japanese lender yet, contradicting earlier claims and prompting a swift market correction.
Bank Responds to Speculation with Caution
In an official filing, YES Bank responded to the market buzz, stating that it regularly explores options with stakeholders to enhance shareholder value, but clarified that current discussions are purely preliminary.
“The information pertaining to discussions is speculative at this time and not factually correct,” the bank emphasized in its disclosure.
Shareholding Structure Remains Fragmented
As of March 2025, SBI held 24% of YES Bank’s shares, with major Indian lenders including HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, and LIC among other key shareholders.
Additionally, Vervanta Holdings and CA Basque Investments hold 9.2% and 6.84%, respectively. Interestingly, 62 lakh small retail investors, each holding up to Rs 2 lakh, collectively own 22.55% of the bank’s shares — making their influence significant in any potential deal.
SMBC Assured of Voting Rights for Smooth Deal
Sources suggest that certain assurances regarding voting rights and control have been extended to SMBC to ensure the acquisition proceeds without regulatory or shareholder resistance. Such accommodations are seen as essential to attracting foreign strategic investors in India’s tightly regulated banking sector.
Failed Past Talks Add Context
It’s worth noting that similar talks with SMBC and Mitsubishi UFJ Financial Group (MUFG) collapsed last year. Both Japanese banks were reportedly seeking relaxed rules on voting rights, which regulators were hesitant to approve.
If this deal finally materializes, it could not only reshape YES Bank’s trajectory but also signify a shift in foreign investor confidence in India’s private banking space.
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