MAYASIA BUSINESS OUTLOOK9NEWSROOMJAPAN'S SMBC IN DISCUSSIONS TO ACQUIRE MAJOR STAKE IN YES BANK INDIAJapanese banking giant Sumitomo Mitsui Banking Corp (SMBC) in advanced talks to buy a significant stake in the sixth-largest private bank, Yes Bank by assets. According to the Economic Times, the move is likely to result in an open offer for an additional 26 percent.Similar reports appeared last year as well. Negotiations to purchase a majority stake in YES Bank were reportedly underway between Dubai-based Emirates NBD and Japanese lender SMBC. The second-largest bank in Japan, Sumitomo Mitsui Financial Group, is the parent company of Sumitomo Mitsui. It was thought at the time that the banking regulator was against the idea of a foreign buyer purchasing more than 51percent of YES Bank and had not yet given a clear "fit and proper" approval.However, a new report claimed that SMBC received verbal assurance from the Reserve Bank of India (RBI) that it would be allowed to keep a majority stake in the bank.YES Bank's shares are down 26 percent in the last year and 34 percent in the last five years.SBI, which owns a 24 percent stake in the bank, could be among the sellers. The report indicated that it was still unclear which of the other financial institutions would exit. If a deal is reached following an open offer, SMBC will become the single-largest shareholder. Domestic banks such as Kotak Mahindra Bank, Axis Bank, ICICI Bank, and life insurer Life Insurance Corporation of India (LIC) had a combined stake of 11.34 percent in YES Bank. As of March 31, private equity funds Advent International and Carlyle held 9.2 percent and 6.84 percent, respectively. .While the FDI rules prohibit a single foreign bank from acquiring a controlling stake in an Indian lender, the report cited exceptions such as Prem Watsa's Fairfax acquiring a 51 percent stake in Catholic Syrian Bank in 2018 and DBS acquiring Lakshmi Vilas Bank in 2020.
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