YES Bank shares surge 10% as SMBC may buy 51% stake; SBI among likely sellers

Shares of YES Bank climbed 10 per cent in Tuesday's trade amid reports Japan's Sumitomo Mitsui Banking Corp (SMBC) has received the RBI nod to pick up 51 per cent stake in the private lender. As per a report by the Mint, the deal is valued at $1.7 billion. Business Today could not independently confirm the report. There was no update on stock exchanges regarding the same. 

As per the report, SMBC may buy less than 26 per cent stake and do a merger via share swap. It may also buy up to 26 per cent stake and launch open offer, the Mint reported.

A report by the ET earlier suggested SMBC was in advanced discussions to purchase a significant stake in the sixth-largest private bank by assets. This report had suggested a likely triggering of an open offer by SMBC for an additional 26 per cent stake. 

Following the development, YES Bank shares surged 9.64 per cent to hit a high of Rs 19.44 on BSE, trimming the year-to-date losses to 5 per cent.  The stock is down 22 per cent in the past one year and 30 per cent in the past five years. 

SBI shares, on the other hand, were trading 0.79 per cent lower at Rs 783.75 on BSE.

It is worth recalling that similar reports surfaced last year. At the time, it was reported that Japanese lender SMBC and Dubai-based Emirates NBD were in advanced discussions to acquire a majority stake in YES Bank. SMBC is a subsidiary of Sumitomo Mitsui Financial Group, Japan’s second-largest banking institution. However, it was understood that the banking regulator had not yet granted definitive ‘fit and proper’ approval and was reportedly resistant to the idea of a foreign entity acquiring more than a 51 per cent stake in YES Bank.

SBI, which owned a 24 per cent stake in YES Bank, was reportedly among the potential sellers. According to The Economic Times, it was unclear which of the other financial institutions may choose to exit. If a deal materialises and is followed by an open offer, SMBC is expected to become the single-largest shareholder, the report stated.

As of March 31, domestic institutions including Kotak Mahindra Bank, Axis Bank, ICICI Bank, and Life Insurance Corporation of India (LIC) collectively held an 11.34 per cent stake in YES Bank. Private equity firms Advent International and Carlyle held stakes of 9.2 per cent and 6.84 per cent, respectively, The Economic Times reported.