SMBC Eyes Controlling Stake in Yes Bank as SBI Reopens Talks

In a major development in the Indian banking space, Japan’s financial giant Sumitomo Mitsui Banking Corporation (SMBC) is once again in active discussions to acquire a controlling stake in Yes Bank. The talks have been revived by the State Bank of India (SBI), which currently holds a 23.97% stake in the Mumbai-based private sector lender.

SBI Looking to Offload Stake in Yes Bank

According to sources familiar with the matter, SBI is likely to sell up to 20% of its stake in Yes Bank to SMBC as part of this renewed engagement. The Japanese conglomerate is also expected to infuse fresh capital equivalent to 6–7% stake, which could be a major turning point in Yes Bank’s future direction.

Once the capital infusion takes place, SMBC may go ahead with an open offer to raise its holding to 51%, thereby gaining controlling ownership of Yes Bank. This would be a significant move in the Indian banking sector, marking one of the largest foreign acquisitions in a private Indian bank.

Major Shareholders May Exit Through Open Offer

Apart from SBI, other key shareholders such as Axis Bank, ICICI Bank, Kotak Mahindra Bank, and HDFC Bank, which together hold a 7.36% stake, are also expected to exit through the open offer. Private equity players Advent International and Carlyle, who currently hold 9.2% and 6.84%, respectively, may also sell their shares. Additionally, the Life Insurance Corporation of India, which owns 3.98%, could potentially participate in the exit plan.

“This is the structure that has been presented to SMBC,” said a banker aware of the developments, indicating that SMBC’s formal response is awaited.

Regulatory Hurdles and Voting Rights Remain a Challenge

One of the biggest hurdles in the deal is the voting rights cap imposed on promoters of private sector banks in India, which is currently limited to 26%. This was a sticking point in earlier talks with both SMBC and Mitsubishi UFJ Financial Group (MUFG) in 2024. However, this time, SMBC appears willing to proceed despite the restriction, possibly after receiving certain assurances regarding operational control and board representation.

Sources indicate that SMBC may nominate directors to critical committees, including the Nomination and Remuneration Committee (NRC). The NRC plays a crucial role in deciding key management appointments, such as the CEO, giving SMBC a stronger operational grip over Yes Bank.

Awaiting Regulatory Nod and Final Terms

“Once SMBC reverts on the proposed terms, the deal will be taken to the regulator for further consideration,” a senior official mentioned.

If all goes as planned, the deal could materialize within the current fiscal year, making it a landmark transaction in the Indian banking and financial services sector.

SBI’s Fundraising Push Adds Context

Interestingly, this development comes close on the heels of SBI’s announcement to raise ₹25,000 crore via equity. Chairman C.S. Setty, during a post-earnings call on May 3, confirmed the plan, saying SBI would explore all options depending on business needs and market conditions—though no timeline was committed.

Yes Bank stake acquisition by SMBC could reshape the ownership and operational structure of the private lender and possibly improve its long-term financial stability. All eyes are now on SMBC’s response and regulatory approval, which could usher in a new era for Yes Bank under Japanese strategic ownership.