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In what could become the largest ever private banking acquisition in India, Japanese financial powerhouse Sumitomo Mitsui Banking Corporation is reportedly on the verge of acquiring a commanding stake in YES Bank. Coordinated closely with India’s largest lender, State Bank of India, which currently holds nearly a quarter ownership, this deal marks a turning point in YES Bank’s journey since its dramatic 2020 rescue.
Months of quiet negotiations are now culminating in a potentially transformative transaction. Senior figures from the Japanese firm were recently seen in Mumbai, locking down final details with Indian stakeholders. If sealed, this move will outshine Sumitomo’s prior Indian investment of over two billion dollars in a local credit firm in 2021.
Although no formal application has yet been filed with India’s central banking authority for this acquisition, insider whispers suggest regulatory comfort has been “verbally assured.” Once complete, Sumitomo may hold as much as 51 percent ownership, which under Indian rules will spark a compulsory public offer for an additional 26 percent of shares.
Despite these developments, any controlling stake will be governed by India’s financial rules, which cap voting power at 26 percent, regardless of shareholding. Interestingly, similar leeway has been granted in past high-profile acquisitions, indicating regulatory flexibility.
This strategic buyout is also expected to usher in leadership changes. With YES Bank’s current Chief Executive Officer Prashant Kumar stepping down by October, the incoming stakeholders are poised to suggest successors to the central bank. India has already been designated as a separate operational zone by the Japanese bank, with Asia Pacific leadership now reporting directly to headquarters in Tokyo. “Eventually, the plan is to merge the two, but that is still far out,” shared a source familiar with the matter.
Meanwhile, YES Bank continues its slow but steady ascent. Deposits have swelled to over 2.85 trillion in the current financial year, more than doubling since the crisis. With a sharp eye on small and medium businesses and retail clients, bank aims to keep these segments as its core pillars. “We would like to keep the proportion of retail and SME at around 60 percent,” Kumar affirmed during a recent earnings call.
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