Japanese financial conglomerate Sumitomo Mitsui Banking Corporation (SMBC) is in discussion to acquire a controlling stake in YES Bank.
The deets: India’s largest bank, SBI, currently owns 23.9% of YES Bank. Back in 2020, SBI along with other Indian banks stepped in like a lifeguard when YES Bank was in a liquidity crisis. Now that the bank is a bit steadier, SBI wants to slowly step away.
The banks including HDFC, ICICI, Axis, Kotak Mahindra are looking to sell their stake to SMBC, a major Japanese bank.
If that goes through, SMBC could end up buying 51% of YES Bank, making it the majority owner. And because of Indian takeover rules, it would then have to make an open offer to buy another 26%, potentially turning this into India’s biggest-ever banking M&A deal.
What YES Bank said: YES Bank said it regularly explores opportunities with different stakeholders to enhance shareholder value, but all discussions are still at a preliminary stage and nothing has been finalised yet.
In simple terms, it means ‘we’re keeping our cards close to the chest for now’.
Background: YES Bank had a near-collapse moment in 2020 when it ran out of money to operate safely, a liquidity crisis. The RBI stepped in, froze withdrawals, and roped in SBI and other Indian banks to keep it from sinking.
Since then, Japanese suitors like MUFG and SMBC have circled the bank, but earlier talks failed.
Zoom out: foreign banks are allowed to invest in Indian private banks, but there are strict limits.
The total foreign ownership can go up to 74%, but any single foreign investor can own only up to 15%. Even if they hold more shares, their voting rights are capped at 26%, meaning they can’t fully control decisions.
This makes big deals complicated. That’s why SMBC’s potential takeover of YES Bank could be a test case to see how much regulatory flexibility the Indian government might allow in the banking sector.
