In a move that could reshape India’s banking landscape, Japan’s Sumitomo Mitsui Banking Corp (SMBC) is reportedly in advanced talks to acquire a 51% stake in Yes Bank. If finalized, this would mark one of the largest foreign investments in the Indian banking sector in recent years.
Market Reacts Strongly to Deal Buzz
Following reports of the potential acquisition, Yes Bank’s stock surged as much as 9.6% during early trade on Tuesday, hitting Rs 19.44 per share on the NSE. However, gains pared later in the day, with shares settling at Rs 18.11, compared to Monday’s close at Rs 17.73. The news injected fresh momentum into market trends, especially around bank rally dynamics and investor sentiment in financial stocks.
Despite the excitement, Yes Bank issued a regulatory filing stating that the reported talks were “speculative” and not “factually correct.” The bank acknowledged that it routinely engages with stakeholders to explore strategic opportunities but emphasized that no formal disclosure is warranted under SEBI norms at this stage.
Deal Details and Regulatory Landscape
Sources close to the matter suggest that SMBC, a subsidiary of Sumitomo Mitsui Financial Group—Japan’s second-largest bank—has been in dialogue with Yes Bank’s largest shareholder, State Bank of India (SBI), as well as the Reserve Bank of India (RBI). While negotiations had stalled earlier over concerns regarding voting rights and ownership limits, insiders indicate the RBI has now given a verbal nod to proceed.
The final structure of the deal is expected to be unveiled by June. SBI, which holds a 24% stake in Yes Bank following the bank’s 2020 restructuring, is reportedly in the process of ironing out deal specifics with SMBC. Meanwhile, other institutional stakeholders like ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, and LIC collectively hold around 11.34% of the bank.
Indian banking regulations mandate that any shareholder holding more than 26% in a bank must gradually reduce their stake to that threshold over a 15-year period. In SMBC’s case, even with a potential majority stake, the RBI is said to be firm on capping voting rights at 26%—a measure aimed at maintaining checks and balances within the financial system.
Outlook and Sector Implications
The potential SMBC-Yes Bank deal signals renewed foreign interest in India’s financial sector, which has seen limited large-scale foreign M&A activity since DBS Group’s acquisition of Lakshmi Vilas Bank in 2020. A successful transaction could influence market trends, spark a broader bank rally, and boost confidence in auto stocks and other related sectors that are closely tied to banking liquidity and credit cycles.
While regulatory approvals and internal negotiations remain ongoing, this developing story has already triggered ripples across the Nifty and other benchmark indices, reinforcing the strategic importance of cross-border partnerships in India’s evolving financial ecosystem.
For updates on this developing story, visit NSE India or RBI’s official site.