SBI plans to sell its entire stake in YES Bank

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State Bank of India (SBI) is planning to sell its entire stake in Yes Bank, four years after it rescued the lender. SBI had invested in Yes Bank as part of a rescue deal in 2020. The stake that SBI is looking to offload is 23.99%. SBI has yet to find a suitable buyer but prefers international investors for the stake sale, although domestic investors are also reportedly in the running. The final decision on the stake sale will be taken after the Reserve Bank of India (RBI) approves a bidder as “fit and proper”. This approval is necessary for companies aiming to acquire a stake of 10% or higher in a private bank. The stake sale, once approved, would mark the culmination of one of the largest rescue operations by the banking regulator.

Earlier reports suggesting that Yes Bank dismissed a majority stake sale were called “factually incorrect” and “speculative in nature” by the bank.

Background on Yes Bank’s Rescue

Yes Bank had faced financial difficulties and was struggling with bad loans, leading to the RBI taking control of the bank in March 2020. As part of the rescue plan, SBI, along with other lenders, stepped in to save Yes Bank. SBI acquired a 49% stake in Yes Bank, which has since decreased to 26.13%. The rescue plan required these lenders to hold on to at least 75% of the shares acquired for three years. The RBI’s plan also involved writing down all instruments issued by Yes Bank that qualified as Additional Tier 1 capital.

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Conclusion

State Bank of India is planning to sell its entire stake in Yes Bank, which it acquired as part of a rescue deal in 2020. SBI has yet to find a suitable buyer but prefers international investors for the stake sale. The final decision on the matter will be taken after the RBI approves a bidder as “fit and proper.” This stake sale would mark the culmination of one of the largest rescue operations by the banking regulator.

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