Japanese financial services giant Sumitomo Mitsui Banking Corporation (SMBC) is once again in active discussions to acquire a controlling stake in Yes Bank, with the State Bank of India (SBI) reopening negotiations with the Japanese conglomerate.
Talks between SBI and SMBC initially commenced in 2024 but stalled. This time, however, the structure of the proposed deal has undergone changes, according to sources.
SBI, which currently holds a 23.97 percent stake in the Mumbai-based Yes Bank, is expected to offload up to 20 percent of its holding to SMBC. In addition to this secondary transaction, SMBC is also likely to infuse fresh capital amounting to 6–7 percent equity. Following this capital injection, the Japanese bank may launch an open offer to raise its total stake in Yes Bank to 51 percent, thereby acquiring a controlling interest.
SBI is expected to tender its remaining shares as part of the open offer, enabling a full exit. Other institutional investors in Yes Bank—including Axis Bank, Kotak Mahindra Bank, ICICI Bank and HDFC Bank, who together hold 7.36 percent—along with private equity firms Advent International and Carlyle, which own 9.2 percent and 6.84 percent respectively, are also likely to exit through the open offer.
The Life Insurance Corporation of India holds a 3.98 percent stake in the bank. A banker involved in the negotiations noted that the Japanese bank’s response was still awaited.
According to sources, several assurances have been offered to SMBC to facilitate a smooth transaction, particularly concerning voting rights and the exercise of control.
Notably, previous discussions with both SMBC and Mitsubishi UFJ Financial Group (MUFG) had failed to progress in 2024, as both suitors were seeking exemptions from India’s cap on voting rights. Under current regulations, promoter voting rights in a private bank are capped at 26 percent, even if the shareholding is higher.
With a 51 percent ownership, SMBC may be able to consolidate Yes Bank’s financials at the group level, though the Japanese bank may need to seek regulatory dispensations in its home jurisdiction. “These factors are under consideration,” the person added.
To gain operational and managerial control, SMBC may seek to nominate directors to key board committees, including the nomination and remuneration committee (NRC), which plays a crucial role in senior appointments such as the CEO.
A senior official said an agreement could be reached within the current financial year, provided SMBC accepts the constraints on voting rights.
