Yes Bank shares jumped up to 8.5% to an intraday high of Rs 19.24 on Tuesday morning. This jump came after reports that Sumitomo Mitsui Banking Corporation (SMBC), one of Japan’s largest financial conglomerates, is in advanced negotiations to buy a major stake in Yes Bank from State Bank of India (SBI).
The Deal That May Shape Yes Bank’s Future
The conference, held in Mumbai last week, was attended by high-ranking executives of SMBC and government officials from SBI, along with other stakeholders. SBI, which already owns a 24% stake in Yes Bank, has been keenly looking for a new strategic investor, with SMBC being one of the most likely contenders.
If this transaction is consummated, it is likely to lead to an open offer for another 26% holding in Yes Bank. If SMBC manages to acquire this additional holding, the Japanese banking giant may become Yes Bank’s largest individual shareholder, a major change in the ownership pattern of the bank.
Largest M&A Deal in India’s Banking Sector
A 51% stake sale in Yes Bank would mark the largest merger and acquisition (M&A) deal in India’s banking sector. This deal would also be the biggest investment by SMBC in India since the Japanese conglomerate acquired a 74.9% stake in Fullerton India Credit, a non-banking financial company (NBFC), for $2 billion in 2021.
Key Stakeholders in Yes Bank’s Ownership
Apart from SBI, other domestic banks like HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, and LIC, together own 11.34% of Yes Bank. Advent International and Carlyle, private equity funds, own 9.20% and 6.84% of the bank, respectively, as of March.
Yes Bank’s Stunning Financial Comeback
Yes Bank’s health has shown a major turnaround since its bailout package in 2020. The bank’s deposits increased by a whopping 2.7x to Rs 2.85 lakh crore in FY25, from levels seen in March 2020. Non-performing assets (NPAs) have also collapsed from 16.8% in FY20 to 1.6% in FY25, and net NPAs have declined from 5% to 0.3% over the same time frame.
In profitability terms, Yes Bank had a net profit of Rs 2,406 crore for the year, a 93% increase over the last year. This is a stunning turnaround, given that the bank had reported a loss of Rs 16,418 crore in FY20.
Looking Ahead: The Potential Impact of SMBC’s Investment
If this deal with SMBC goes through, it would greatly strengthen Yes Bank’s position in the Indian banking market. Not only would it inject a badly needed financial injection, but it would also introduce SMBC’s worldwide experience in risk management, technology, and operational efficacy to Yes Bank. This strategic alliance could lead to further growth and international expansion.
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