Japanese banking behemoth Sumitomo Mitsui Banking Corporation (SMBC) is back in negotiations to buy a controlling stake in Yes Bank, with the State Bank of India (SBI) reopening negotiations. Negotiations between the two parties had initially started in 2024 but have now resumed with new terms.
SBI, which now owns 23.97% in Yes Bank, is said to be mulling selling as much as 20% of its holding to SMBC. As part of this acquisition, SMBC will pump in fresh funds equivalent to a 6–7% holding. Following the infusion of funds, SMBC may make an open offer to raise its overall holding in Yes Bank to 51%, taking control of the bank.
SBI can distribute the remainder of its holdings under this open offer. Other institutional players in Yes Bank such as Axis Bank, Kotak Mahindra Bank, ICICI Bank, HDFC Bank (with an aggregate holding of 7.36%), and private equity players Advent International (9.2%) and Carlyle (6.84%) too are likely to exit from their stakes by way of the open offer. LIC too, that holds 3.98%, can be a part of this.
Sources indicate that SMBC was offered this structure of the deal, and it is waiting for its response. The emails to SBI and SMBC remained unanswered at the time of publication.
There are some regulatory guarantees made to assist the deal through — specifically for voting rights and management control. There were failed discussions with SMBC and Mitsubishi UFJ Financial Group (MUFG) last year, largely due to constraints under Indian law, which has a limit on promoter voting rights in private banks at 26%, regardless of whether shareholding is more than that.
This time, SMBC appears willing to go ahead despite these constraints, realizing that even if it ends up with 51% of the shares, its voting power would still be limited. Nevertheless, with majority control, SMBC would be able to consolidate Yes Bank’s books at the group level and potentially have a role in appointing key management, such as board-level representation on the Nomination and Remuneration Committee (NRC).
If the terms are agreed to by SMBC, the transaction will be taken to Indian regulators. A final deal is expected in the current financial year, officials said.
Independently, SBI has recently finalized plans to raise ₹25,000 crore equity capital — its first attempt in almost seven years. The bank, however, has not indicated a time frame and has said it would be based on market and business conditions.
