Yes Bank shares surge on talks of acquisition by Japan's Sumitomo Mitsui

Shares of Yes Bank soared on Tuesday morning with reports indicating that Japan's Sumitomo Mitsui Banking Corp (SMBC) is close to acquiring a stake in the private sector lender, that had to be bailed out by a State Bank of India-led consortium back in March 2020.

Yes Bank shares, which had closed at Rs 17.73 on Monday, hit a high of Rs 19.44 after opening and were up around 5.5 per cent at Rs 18.69 in morning trade. The broader BSE Sensex was trading in the red.

A report by the Mint newspaper stated that Japanese financial giant SMBC has got the green light from Reserve Bank of India to buy a majority stake in Yes Bank. SMBC could either buy less than 26 per cent stake in the lender initially and later merge with Yes Bank via a share swap, or directly acquire 26 per cent stake in the lender. Should SMBC take the second route, it could trigger an open offer. SMBC's stake in Yes Bank could eventually rise to 51 per cent, but its voting rights may be capped at 26 per cent, as per RBI regulations.

Even in earlier cases where Singapore's DBS had acquired Lakshmi Vilas Bank, or Fairfax's acquisition of Catholic Syrian Bank, the voting rights had been significantly capped.

Several Japanese and Middle Eastern banks had held discussions for a potential acquisition of Yes Bank over the past year.

Yes Bank, once the fifth largest private lender, had to be bailed out in March 2020 amid worsening asset quality, governance issues and steady withdrawal of deposits. The troubles at such a large bank had sent shock waves across India, prompting a quick rescue. The RBI superseded the bank's board on March 5, 2020 and under a reconstruction scheme, a consortium led by India's largest lender SBI acquired major stake in Yes Bank. While SBI acquired 49 per cent stake, other lenders including HDFC, ICICI Bank and Axis also chipped in with investments.

Things have turned around over the last five years. For the year-ended March 2025, Yes Bank reported a net profit of Rs 2,406 crore and net interest income of Rs 8,944 crore. Its total deposits stood at Rs 2.85 lakh crore, while advances were at Rs 2.46 lakh crore. As of March 31, its gross NPAs were at 1.6 per cent, while net NPAs stood at 0.3 per cent.

For the quarter ending March 2025, SBI's stake in Yes Bank was at 23.97 per cent, Life Insurance Corporation of India held 3.98 per cent, HDFC Bank held 2.75 per cent, ICICI Bank had 2.39 per cent, Kotak Mahindra Bank had 1.21 per cent and Axis Bank held 1.01 per cent.

Separately, private equity funds held around 16 per cent stake and foreign portfolio investors had a little over 10.5 per cent in Yes Bank.

Neither SMBC nor Yes Bank, or SBI have commented on the potential deal so far.

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