In a landmark transaction that reshapes foreign participation in India’s banking sector, the State Bank of India (SBI) has successfully divested a 13.19% stake in YES Bank to Japan’s Sumitomo Mitsui Banking Corporation (SMBC), generating ₹8,889 crore in proceeds. The deal, finalized on September 17, 2025, marks the completion of one of the largest cross-border investments in Indian banking history.
SBI sold approximately 413.44 crore equity shares at ₹21.50 apiece. The transaction was executed after SMBC secured regulatory approvals from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI). Following the sale, SBI retains a residual 10.8% stake in YES Bank, down from its earlier 24% holding.
Strategic Implications for YES Bank and SMBC
SMBC, a subsidiary of Sumitomo Mitsui Financial Group (SMFG)—Japan’s second-largest banking group—now holds a 13.19% stake in YES Bank, with plans to increase its holding to 24.99% through additional acquisitions from other institutional shareholders. This move is expected to bring global governance standards, capital infusion, and strategic direction to YES Bank, which has been undergoing restructuring since its 2020 crisis.
SMBC will not assume ownership control but will gain board representation, including influence over the appointment of YES Bank’s next Managing Director and CEO, replacing Prashant Kumar. Analysts expect this partnership to catalyze asset quality improvements, capital access, and operational efficiency.
Market Reaction and Financial Impact
SBI shares rose 1.94% to ₹848 following the announcement, reflecting investor optimism over the capital inflow and strategic clarity. YES Bank shares dipped marginally by 0.43% to ₹20.91, as the market priced in near-term dilution and restructuring uncertainty.
The ₹8,889 crore inflow will be booked as “other income” in SBI’s Q2 FY26 results, providing a buffer against margin pressures and treasury volatility. Additionally, the transaction qualifies for capital gains tax exemption under the YES Bank Reconstruction Scheme, 2020—a provision designed to reward banks that supported YES Bank during its crisis.
Broader Sectoral Impact
This deal sets a precedent for foreign strategic investments in Indian banks, especially in post-restructuring scenarios. It also reflects the success of RBI’s 2020 intervention model, which brought together public and private banks to stabilize YES Bank. Alongside SBI, seven other banks—including HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank—are jointly divesting a combined 6.81% stake to SMBC.
SMBC is also in discussions to infuse ₹16,000 crore into YES Bank through a mix of debt and equity, further strengthening the bank’s capital base and long-term viability.
What Traders and Investors Should Watch
For market participants, this transaction signals renewed confidence in YES Bank’s turnaround and SBI’s capital discipline. However, analysts caution that YES Bank’s core profitability remains sub-par, with some brokerages retaining a ‘Sell’ rating and a target price of ₹17.
Traders should monitor:
- SMBC’s next tranche of stake acquisition
- Changes in YES Bank’s leadership and governance
- Capital infusion timelines and impact on CET-1 ratios
- SBI’s Q2 earnings and treasury performance
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Conclusion
SBI’s divestment in YES Bank marks a strategic milestone for Indian banking and foreign investment. As SMBC steps in with capital and expertise, YES Bank enters a new phase of transformation. For traders and investors, aligning with a trusted research desk like Eqwires ensures you stay ahead of the curve—with clarity, discipline, and results.
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