Yes Bank has witnessed substantial changes in its ownership structure, with major transactions involving international and domestic financial institutions.

Transaction Details

Key Developments

1. Sumitomo Mitsui Financial Group (SMFG) acquired a 4.2% stake in Yes Bank from Carlyle Basque for ₹28,050.00 crores.

2. Bandhan Bank and Federal Bank sold a combined 32.01 crore shares to Sumitomo Mitsui Banking Corporation (SMBC) for ₹6,900.00 crore.

3. Bandhan Bank reduced its stake from 0.70% to 0.21% by selling 15.39 crore shares.

4. Federal Bank sold 16.62 crore shares as part of a previously signed agreement.

Implications for Yes Bank

These transactions bring several potential benefits to Yes Bank:

1. Capital Infusion: The substantial investments represent significant capital inflows for Yes Bank, potentially strengthening its financial position.

2. International Backing: The stake acquisitions by SMFG and SMBC may enhance Yes Bank's credibility in global financial markets.

3. Strategic Partnerships: These investments could pave the way for future collaborations and knowledge sharing between the Japanese financial institutions and Yes Bank.

Market Perspective

The acquisitions underscore the growing interest of international financial institutions in India's banking sector. They reflect positively on Yes Bank's potential and the overall growth prospects of the Indian financial market.

These developments are part of SMBC's commitment to increase its exposure to the Indian banking sector through equity participation in Yes Bank. The transactions were completed after obtaining necessary regulatory approvals.

The deals represent an ongoing ownership reshuffle at Yes Bank, with global strategic investors replacing smaller shareholders as the bank continues to stabilize its balance sheet. This shift in ownership structure emphasizes the increasing presence of Japanese financial institutions in the Indian banking landscape.

State Bank of India (SBI) and seven private banks are poised to sell their collective 20% stake in Yes Bank to Japan's Sumitomo Mitsui Banking Corporation (SMBC) for a substantial ₹13,483 crore. The deal, priced at ₹21.50 per share, represents a significant return on investment for the selling banks, who originally acquired these shares at ₹10 each in 2020 under the Yes Bank Reconstruction Scheme.

Tax-Free Windfall for Selling Banks

In a notable financial advantage, the entire proceeds from this sale will be exempt from capital gains tax. This exemption, granted under the Yes Bank Reconstruction Scheme 2020, will save the selling banks from paying the standard 12.5% long-term capital gains tax, further boosting their returns from the transaction.

Breakdown of the Stake Sale

The stake sale involves a consortium of Indian banks, with SBI taking the lead:

*Private banks include HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank, and Bandhan Bank.

SMBC's Strategic Move

SMBC has already secured approval from the Reserve Bank of India (RBI) to acquire up to a 24.99% stake in Yes Bank. This leaves room for the Japanese banking giant to potentially purchase an additional 4.99% stake, either from private equity firms or through preferential shares.

Future Capital Infusion

In addition to the stake purchase, SMBC is reportedly in discussions to inject a substantial ₹16,000 crore into Yes Bank. This capital infusion is expected to be structured as a combination of debt and equity funding, potentially strengthening Yes Bank's financial position and capital adequacy.

Implications for Yes Bank

This significant investment by SMBC could mark a turning point for Yes Bank, which has been working to stabilize its operations since its near-collapse in 2020. The influx of foreign capital and the strategic partnership with a major global banking player may help bolster Yes Bank's financial health and market position in the Indian banking sector.

The stake sale represents a successful exit strategy for the consortium of Indian banks that stepped in to rescue Yes Bank during its financial crisis. It also demonstrates the attractiveness of the Indian banking sector to international investors, particularly as the sector continues to evolve and strengthen its regulatory framework.