Historic Banking Deal in the Making

Japanese banking giant Sumitomo Mitsui Banking Corp (SMBC) is reportedly in the final stages of acquiring a significant stake in Yes Bank, India's sixth-largest private lender by assets. This potential deal could mark the largest ever banking M&A in India, surpassing SMBC's previous $2 billion investment in the country.

Strategic Talks and Stakeholder Dynamics

Senior executives from SMBC were recently in Mumbai to negotiate terms with the State Bank of India (SBI) and other key shareholders. SBI, which currently holds a 24% stake in Yes Bank, has been actively seeking a new owner for its share. The involvement of other stakeholders, including major Indian banks and private equity firms, remains uncertain.

Regulatory Comfort and Future Plans

The Reserve Bank of India (RBI) has reportedly given verbal assurance to SMBC regarding majority ownership, despite existing foreign direct investment caps. Plans for a future merger between SMBC India and Yes Bank are under discussion, though implementation may be some time away.

Yes Bank's Remarkable Turnaround

Since its 2020 rescue, Yes Bank has shown significant improvement, with a 93% year-on-year increase in net profit to Rs 2,406 crore in FY25. Gross NPAs have dramatically decreased from 16.8% in FY20 to just 1.6%, showcasing the bank's recovery and growth trajectory.