SBI likely to cut Yes Bank stake as lock-in ends on March 6

State Bank of India may look to lower its stake in Yes Bank Ltd after the lock-in period ends on March 6, which was put in place by Reserve Bank of India as part of the lender's restructuring, said a report on Thursday. SBI's decision is likely to come at a time when Yes Bank's financials have improved in the last few quarters and private equity majors Carlyle Group and Advent have picked up 9.99 per cent stake in the bank.

"SBI does not want to permanently retain a stake in Yes Bank and would want to trim its holdings, albeit in phases," sources told Reuters on condition of anonymity.

The board of SBI is likely to meet soon to decide on the future of its stake in Yes Bank, following which a proposal will be sent to the RBI, reported Reuters quoting a source.

"The percentage of equity dilution that the bank intends to do will have to be placed before the RBI in due course."

SBI, which initially acquired 49% of Yes Bank, now holds a 26.14% stake as of Dec. 31, stock exchange data showed. SBI is still the largest single shareholder in the rescued lender.

SBI cannot reduce its holding below 26% before completion of three years from the date of infusion of the capital, as per the reconstruction plan.

SBI, along with other lenders such as ICICI Bank, Axis Bank, IDFC FIRST Bank, Kotak Mahindra Bank, Housing Development Finance Corp had stepped in to rescue Yes Bank in March 2020, after the Reserve Bank of India superseded the bank's board.

At the time, the reconstructuring scheme put in place by RBI required these lenders to hold on to at least 75% of the shares acquired for three years. A similar restriction was placed on other existing shareholders.

ICICI Bank, Axis Bank, IDFC FIRST Bank held 2.61%, 1.57% and 1% stakes respectively, as of end-December. State-owned Life Insurance Corporation holds 4.34%, while HDFC holds 3.48%.

At 1515 hours on Thursday, Yes Bank shares were trading 4.3% lower at Rs 17.5, compared to Rs 10 at the time when SBI acquired these shares.

In September last year, Yes Bank had said that the RBI would allow it to exit a reconstruction scheme only after the share lock-in period ends.

With inputs from Reuters