Amid speculations, Yes Bank on Tuesday said that discussions with Sumitomo Mitsui Banking Corp. (SMBC) over stake buy are currently preliminary, adding that it routinely explores opportunities aimed at enhancing shareholder value. The Economic Times in its May 6 edition had reported that SMBC is in advanced talks with the private lender to buy a significant stake in Yes Bank, following months of negotiations. The move is expected to trigger an open offer for an additional 26% of the bank, the sixth-largest private lender by assets.
“Such discussions are preliminary and do not warrant a disclosure under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, at this stage,” said Yes Bank through a stock exchange filing.
Read More: Japan’s financial powerhouse SMBC moves a step closer to taking control of Yes Bank
Shares of private sector lender Yes Bank jumped as much as 8.5% to an intraday high of Rs 19.24 on Tuesday morning after ET’s report on the move.
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SBI, which holds a 24% stake in the lender, has been looking for a new owner, following Yes Bank’s turnaround after a central bank-orchestrated rescue in 2000. Domestic banks and financial institutions such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank and Life Insurance Corp. of India together own 11.34% of Yes Bank. Private equity funds Advent International and Carlyle held 9.20% and 6.84%, respectively, as of March.The Japanese conglomerate’s senior leaders met their counterparts in State Bank of India (SBI) along with other key shareholders in Mumbai last week to finalise terms, reported ET. ET had reported that SMBC is said to have received a verbal assurance from the Reserve Bank of India (RBI) that it will be allowed to retain a majority stake in the bank. Current foreign direct investment (FDI) norms permit aggregate overseas participation in Indian private banks up to 74%, with the holding of each entity capped at 15%. FDI rules don’t permit a single foreign bank to take a controlling stake in an Indian lender. However, the RBI has made exceptions, including Prem Watsa’s Fairfax acquiring a 51% stake in ailing Catholic Syrian Bank in 2018 or DBS taking over Lakshmi Vilas Bank in 2020. The equity value of the targets was near zero in those instances.
Yes Bank’s total deposits rose to Rs 2.85 lakh crore in FY25, up 2.7 times since March 2020, when the rescue took place. Gross non-performing assets (NPAs) have dipped to 1.6% and net NPAs to 0.3% in FY25 from 16.8% and 5%, respectively, in FY20. For the full year, it reported net profit of Rs 2,406 crore, up 93% over the previous year and compared with a loss of Rs 16,418 crore in FY20. However, net interest margin was little changed at 2.4% in FY25 from 2.2% in FY20.
The bank expects reasonable growth in retail assets, Kumar said on an analyst call after March quarter earnings.
AloJapan.com