This potential acquisition may echo the 2018 precedent when the RBI permitted Canada’s Fairfax Holdings Ltd to take a 51% stake in Kerala-based Catholic Syrian Bank, marking the first instance of a foreign investor obtaining majority ownership in an Indian bank.
Akihiro Fukutome, the global CEO of Sumitomo Mitsui Banking Corp (SMBC), is set to visit India this week to explore the possibility of acquiring a substantial stake in Yes Bank Ltd, as reported by the business daily Mint. During his visit, Fukutome is expected to meet with officials from the Reserve Bank of India (RBI) and the State Bank of India (SBI) to discuss the potential acquisition.
Sources familiar with the situation told Mint that SMBC is targeting a valuation of around $5 billion for a 51 percent stake in Yes Bank. As of Monday’s close, Yes Bank’s market capitalization was approximately Rs 76,531 crore, or about $9.1 billion.
“SMBC has commenced due diligence and is requesting detailed information from Yes Bank,” a source revealed to Mint. “The global CEO is set to discuss the stake sale with senior officials from the RBI and SBI early this week.”
SBI, which owns a 23.99 percent stake in Yes Bank, has been seeking to reduce its holding since the end of a three-year lock-in period last year. The state-owned bank had initially acquired a 49 percent stake in Yes Bank as part of a government-led bailout in 2020.
Another source noted that the RBI is supportive of a global bank acquiring a stake in Yes Bank, though the central bank has not yet approved the “fit-and-proper” assessment of the prospective investor.
This potential acquisition could follow a precedent set in 2018 when the RBI allowed Canada’s Fairfax Holdings Ltd to acquire a 51 percent stake in Kerala-based Catholic Syrian Bank, marking the first majority ownership of an Indian bank by a foreign investor.
For the proposed deal, Sumitomo Mitsui has enlisted JPMorgan as its financial advisor and J Sagar Associates as its legal advisor. Yes Bank has appointed Citigroup to identify suitable promoters. In response to Mint’s queries, a Yes Bank spokesperson stated, “As previously mentioned and clarified to stock exchanges, we have no comments to offer regarding stake sales as these inquiries are speculative in nature.” Moneycontrol could not independently verify the report.
The report also noted that prospective investors are likely to seek clarity on an ongoing court case concerning the write-down of Yes Bank’s additional tier-I (AT-1) bonds, valued at Rs 8,415 crore. These bonds were written off in March 2020 as part of the bank’s reconstruction scheme. The decision was challenged by retail bondholders in the Bombay High Court, which ruled in their favor in January last year. Yes Bank, along with the RBI and the government, has appealed the ruling to the Supreme Court, where the case is awaiting a final decision.
