MUMBAI, Oct 17
Japanese bank Sumitomo Mitsui Banking Corporation has no immediate plans to boost its stake in Yes Bank, according to a senior official. The current holding stands at 24.2%, and acquiring a stake of 25% or more would necessitate a tender offer for additional shares from public shareholders.
In an interview in Mumbai, Rajeev Kannan, the executive officer and head of SMBC’s India division, indicated that the bank is primarily focused on supporting Yes Bank’s growth rather than pursuing an increase in ownership. He stated, “We are not actively considering increasing our stake in Yes Bank beyond the regulatory permissible limit.” Kannan highlighted that Yes Bank has numerous areas needing attention and improvement.
Following a major acquisition in May, where SMBC acquired a 20% stake in Yes Bank, the bank has been navigating its position carefully contrary to some analysts’ assumptions about seeking more control.
Despite this cautious approach, Kannan expressed intentions to ensure Yes Bank enhances its cost of funds and overall return metrics against its competitors.
In August, the Reserve Bank of India approved SMBC’s acquisition of up to a 24.99% stake in Yes Bank from its larger counterpart, State Bank of India. SBI has agreed to maintain its stake at 10.8%, indicating a continued partnership.
Interestingly, after the news broke regarding the cautious approach of SMBC, Yes Bank’s share price saw a decline of over 4%, though its value had increased significantly since the acquisition announcement.
Future Plans in India
SMBC, which has about $7 billion in investments across India, is also considering separating its non-bank lending operations from its investment in Yes Bank. Kannan mentioned that the current focus is on evaluating each entity individually, without rushing into integration at this stage.
He also noted that while they have no plans yet to establish a wholly-owned subsidiary in India, they are exploring various opportunities, especially in wealth management and investment banking through Yes Bank.
Overall, as SMBC navigates its strategy, it appears focused more on fostering growth within Yes Bank and ensuring the lender’s operational improvements rather than rapidly expanding its ownership. This nuanced approach highlights a balanced perspective amid varying expectations from analysts and market observers.
