Yes Bank was once seen as one of the fastest-growing private sector banks in India. However, its aggressive lending practices and growing exposure to risky borrowers led to a build-up of bad loans. Concerns about the bank’s financial reporting began to surface, which slowly eroded investor and depositor confidence.
As the situation got worse, the Reserve Bank of India stepped in to stop the bank from failing. It put a temporary limit on how much money people could take out. The RBI soon made a plan to fix the bank and brought in new leaders to help steady things.
The revival plan involved support from several large Indian banks, which came together to infuse fresh capital. With regulatory guidance and capital backing, Yes Bank resumed normal operations. Although it continues to rebuild its reputation, the crisis served as a major lesson for the Indian banking sector.
Recent Updates
Sumitomo Mitsui Banking Corporation (SMBC) is one of Japan’s biggest and most trusted banks. It is part of the Sumitomo Mitsui Financial Group (SMFG) and offers global banking services. SMBC is expanding its presence in emerging markets like India.
Sumitomo Mitsui Banking Corporation (SMBC), Japan’s second-largest bank and part of the Sumitomo Mitsui Financial Group, has agreed to acquire a 20 percent stake in India’s Yes Bank for Rs. 13,483 crore (approximately $1.58 billion).
This transaction involves purchasing a 13.19 precent stake from the State Bank of India (SBI) and a combined 6.81 percent from seven other Indian banks, including HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, IDFC First Bank, Federal Bank, and Bandhan Bank
The purchase price is set at Rs. 21.50 per share, which is a significant premium over the Rs. 10 per share paid by these banks during the 2020 bailout with the RBI’s Help.
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Which Bank Holds How Much Stake in Yes Bank
SBI holds a 23.97 percent stake in Yes Bank, followed by HDFC with 2.75 percent, ICICI at 2.39 percent, Kotak Mahindra at 1.21 percent, Axis Bank at 1.01 percent, IDFC First at 0.92 percent, Federal Bank at 0.76 percent, and Bandhan Bank at 0.70 percent.
After selling their stakes, the pre-tax returns are estimated to be Rs. 8,889 crore for SBI, Rs. 1,298 crore for HDFC, Rs. 1,128 crore for ICICI, Rs. 571 crore for Kotak Mahindra, Rs. 477 crore for Axis Bank, Rs. 434 crore for IDFC First, Rs. 359 crore for Federal Bank, and Rs. 330 crore for Bandhan Bank.
SBI will be making a significant profit by selling its stake in Yes Bank, having bought shares at Rs. 10 and exiting at Rs. 21.50 per share. Similarly, HDFC, ICICI, Kotak Mahindra, Axis Bank, IDFC First, Federal Bank, and Bandhan Bank are all set to earn substantial gains from their investments, benefiting from the rise in share price from Rs. 10 to Rs. 21.50. This marks a strong return for all these banks on their original investments.
Written By Abhishek Das
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