Japan’s Sumitomo gets RBI green signal to buy Yes Bank: report

The Reserve Bank of India (RBI) has given Japan’s Sumitomo Mitsui Banking Corp. (SMBC) the green signal to buy a 51% stake in private lender Yes Bank in a deal that values the bank at $1.7 billion, Mint reported, citing two people aware of the developments.

SMBC will either buy less than 26% in Yes Bank and do a merger through a share swap, or may buy up to 26% and launch an open offer, the report said. Currently, State Bank of India (SBI) and other lenders hold a 33% stake in Yes Bank. SMBC’s voting rights in Yes Bank will be capped at 26%, the report added.

Shares of Yes Bank opened higher on Tuesday at ₹19.24 apiece against its earlier close of ₹17.73 on BSE, rallying about 10% before paring the gains.

Later in the day, CNBC-TV18 reported the report as incorrect, citing people in the banking sector aware of the issue.

The deal, if it comes through, will provide an exit route for SBI and other lenders who were brought in to shore up the private bank five years ago, as well as help India’s sixth largest private bank compete better with rivals.

The Japanese lender may raise its shareholding to 51% in phases, starting with a stake purchase from shareholders including SBI, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank, the report said.

These lenders collectively own a 33.74% stake in Yes Bank, with SBI alone holding an about 23.99% stake.

SMBC is pushing RBI to set up a wholly owned unit in India in a move that will allow it more operational flexibility.