State Bank of India (SBI), the largest lender in the country, is working towards finalizing a deal by the end of March to sell its 24% stake in Yes Bank, valued at 184.2 billion rupees ($2.2 billion). This information comes from four sources with direct knowledge of the situation.
Current Stakeholders and Potential Buyers
Japanese lender Sumitomo Mitsui Banking Corp and Dubai-based Emirates NBD are in advanced discussions to acquire a majority stake in Yes Bank. Sumitomo Mitsui is a division of Sumitomo Mitsui Financial Group, Japan’s second-largest bank. Both bidders are aiming for a 51% stake in Yes Bank to gain substantial control over the bank’s operations. The Reserve Bank of India (RBI) has provisionally approved this proposal, and due diligence is currently underway.
Background on Yes Bank
Yes Bank underwent restructuring in March 2020 with the assistance of a consortium of local banks after experiencing significant financial difficulties. SBI currently owns about 24% of Yes Bank, while 11 other lenders, including ICICI Bank and HDFC Bank, hold a combined 9.74%. Additionally, two private equity funds, CA Basque Investments and Verventa Holdings, own 16.05% of the bank. The remainder is held by other investors and the public.
Regulatory and Negotiation Challenges
The bidders are requesting a relaxation of the regulatory requirement that mandates a reduction in promoter shareholding to 26% within 15 years of the investment. Discussions are ongoing regarding this issue. The sources providing this information chose to remain anonymous as they are not authorized to speak with the media.
Official Statements and Market Reactions
SBI has firmly denied any developments related to this matter. Yes Bank has also declined to comment, stating that inquiries about the stake sale are speculative. RBI and Emirates NBD did not immediately respond to requests for comment from Reuters. Sumitomo Mitsui Banking Corp declined to comment on individual deals.
Market Valuation and Process
At the current market price of 24.60 rupees, Yes Bank is valued at 770.95 billion rupees. Once the RBI formally approves the bidders, the sale process is expected to proceed quickly, allowing SBI to negotiate terms such as valuation with the interested parties. SBI anticipates a profit of around 100 billion rupees from this transaction.
Potential Delays
The process could face delays due to market volatility in Japan and concurrent government stake sale processes in IDBI Bank. Emirates NBD, which is also interested in acquiring private lender IDBI Bank, may prefer to wait until that process is completed before finalizing any deals related to Yes Bank.
