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SMBC has expanded its shareholding in Yes Bank by acquiring an additional 4.2% stake from Carlyle Group's affiliate for 51 billion yen (USD 349 million). The Japanese lender had recently concluded its earlier 20% purchase, which included 13.19% from SBI and 6.81% from seven other Indian banks. With approvals from the Reserve Bank of India and the Competition Commission, SMBC is now close to the permitted ceiling of 24.99%. SBI has received INR 8,889 crore from its divestment. SMBC also sold its 1.65% stake in Kotak Mahindra Bank to focus its India investment on Yes Bank.
Sumitomo Mitsui Banking Corporation (SMBC), the banking arm of Japan's Sumitomo Mitsui Financial Group and the country's second-largest lender by assets, has increased its investment in India's Yes Bank. The bank has purchased an additional 4.2% stake from an affiliate of Carlyle Group for 51 billion yen (USD 349 million). With this transaction, SMBC moves closer to the upper limit of 24.99% ownership permitted by Indian regulators. Advertisement
SMBC had already completed the acquisition of its initial 20% stake in Yes Bank, a deal that was first announced in May and formally concluded recently. That earlier purchase involved shares acquired from multiple Indian lenders, including a 13.19% stake from State Bank of India (SBI) and 6.81% from seven other banks such as Axis Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank, and IDFC First Bank.
India's central bank had approved SMBC's plan to buy up to 24.99% in August, subject to conditions, and the Competition Commission of India gave its clearance earlier this month. Despite this increased ownership, regulators have clarified that SMBC will not be classified as a 'promoter' of Yes Bank, which means it will not take on the additional responsibilities that promoter status typically brings under Indian banking regulations.
In a separate disclosure, SBI confirmed that it has received INR 8,889 crore (about USD 1 billion) from the sale of its 13.19% stake in Yes Bank to SMBC. This marks one of the largest single divestments by SBI in recent years and allows the public sector lender to release capital that was tied up in Yes Bank since its rescue in 2020.
SMBC also announced that it had sold its entire 1.65% stake in Kotak Mahindra Bank earlier this month. The bank explained that the decision was taken to rebalance its strategic investment portfolio. Notably, part of SMBC's initial 20% stake in Yes Bank had been acquired from Kotak Mahindra, making this exit a step toward concentrating its India investment mainly in Yes Bank.
Yes Bank's management has indicated that SMBC is expected to maintain at least a 20% stake. The bank has said that while its core focus remains on retail lending, the strategic partnership with SMBC will help expand its corporate and transaction banking business. For Yes Bank, this development marks the entry of a long-term foreign institutional investor at a time when it continues to strengthen its balance sheet and rebuild its position in the Indian banking sector.
The deal also highlights the ongoing reshaping of Yes Bank's shareholding pattern. After the 2020 bailout led by SBI and other domestic banks, the entry of SMBC as a large foreign shareholder is seen as a step toward diversifying the bank's investor base and improving governance oversight.
Source Reuters
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