Yes Bank shares soars 9% in early trade on May 12 after Sumitomo Mitsui Banking Corporation (SMBC) of Japan announced a landmark investment. SMBC will acquire a 20% stake in Yes Bank for ₹13,483 crore, making this one of the largest foreign direct investments in India’s private banking sector. The Yes Bank SMBC stake deal involves a secondary purchase at ₹21.5 per share—about 7.5% above the bank’s previous closing price.
This move has not only stirred the market but also reinforced foreign confidence in India’s evolving private banking ecosystem. The transaction still awaits approvals from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI).
Breaking Down the ₹13,483 Cr Deal
SMBC’s 20% stake will be bought in two parts—13.19% from SBI, India’s largest lender, and the rest from a group of private banks, including HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, IDFC First Bank, Bandhan Bank, and Federal Bank. These banks originally stepped in during Yes Bank’s 2020 crisis, investing at around ₹10 per share.
The massive return of over 115% in five years translates into an annualised gain of 20%, making it a highly profitable exit for these investors. For SBI alone, this deal will unlock over ₹9,000 crore, boosting its profits by 7.5% in FY26 and freeing up tied capital.
Why SMBC’s Investment Is a Game Changer?
The RBI generally caps foreign ownership in private banks at 15%, and voting rights at 26%. Yet, exceptions have been made in special cases. This 20% acquisition signals regulatory openness in strategic scenarios, particularly when systemic stability is at stake.
Yes Bank aims to use SMBC’s global expertise to strengthen its business, improve profitability, and accelerate growth. Analysts also speculate on a potential merger between Yes Bank and SMFG India (formerly Fullerton India Credit), which could push SMBC’s stake to 45% if permitted.
What Retail Shareholders and Traders Must Know?
While major banks are partially exiting, Yes Bank has 62 lakh small retail investors holding up to ₹2 lakh each. As of March 2025, they collectively own 22.55% of the bank. The stock’s current market price has even edged above the deal price, reflecting bullish sentiment.
However, investors must consider that regulatory approvals are still pending, and short-term volatility is expected. For long-term investors, SMBC’s backing can be seen as a vote of confidence in Yes Bank’s turnaround story.
Key Takeaways for Traders and Investors
- The SMBC-Yes Bank deal is India’s biggest foreign investment in private banking.
- SBI and partner banks are making handsome returns, with up to 115% profits in 5 years.
- SMBC brings global banking experience, which could uplift Yes Bank’s prospects.
- Regulatory nods are awaited, and any delays may impact stock movements.
- A future merger with SMFG India could reshape Yes Bank’s market position
Disclaimer: The views and investment insights provided here are based on publicly available information and do not constitute financial advice. Readers are advised to conduct their own research or consult certified financial experts before making investment decisions.
