Yes Bank's proposed stake sale has met a regulatory stumbling block since the Reserve Bank of India (RBI) is hesitant to hand up a majority ownership to a foreign financial institution, according to a source familiar with the situation.
Japanese lender Sumitomo Mitsui Banking Corp (SMBC) and Dubai-based Emirates NBD have shown an interest in purchasing a controlling share of more than 51% in Yes Bank. Sumitomo Mitsui is a subsidiary of Sumitomo Mitsui Financial Group, Japan's second-largest bank.
According to the source, SMBC has been in direct negotiations with the RBI on this issue, but the regulator is unwilling to give up ownership control.
According to insiders, both bidders are interested in obtaining a 51% ownership in Yes Bank and holding it in perpetuity. However, under bank licensing regulations, promoters must cut their ownership to 26% within 15 years after commencing operations.
According to insiders, due to this standoff, State Bank of India (SBI) board members have yet to consider the share sale proposal because there is no clear deadline.
On Thursday, Yes Bank's shares fell 1.7% to Rs 23.43 on the BSE.
In March 2020, the regulator reorganized Yes Bank with the assistance of a consortium of local banks due to its worsening financial condition. According to media sources, SBI has listed its 24% share in Yes Bank. Other banks, including Axis Bank, Kotak Mahindra Bank, ICICI Bank, and HDFC Bank, hold 7.4%. Carlyle and Advent are private equity investors who hold around 14%.
Yes Bank posted a standalone net profit of Rs 502.43 crore for the quarter ending June 30, up 47% year on year. The net profit increased by 11.2% on a quarterly basis, while the net interest margin (NIM) remained stable at 2.4%.
