SBI makes 3.6 times gain as it fetches Rs 8,889 crore by selling 13.18% stake in Yes Bank

The State Bank of India (SBI) officially announced on Wednesday the completion of its divestment of a significant 13.18% stake in Yes Bank to Japan’s Sumitomo Mitsui Banking Corporation (SMBC) for a staggering ₹8,888.97 crore. This transaction represents the single largest cross-border investment ever witnessed in the Indian banking sector and culminates a highly successful financial rescue operation led by SBI.

The deal is exceptionally profitable for the state-owned banking behemoth. SBI’s initial investment, made under an RBI-mandated reconstruction scheme in March 2020 to save Yes Bank from collapse, was ₹2,450 crore for a 49% stake. The sale of just 13.18% of its holding for nearly ₹8,889 crore signifies a monumental financial return, translating to a gain of 3.62 times the original investment. Furthermore, under the unique terms of the 2020 bailout agreement, these substantial profits are exempt from long-term capital gains tax, a significant fiscal advantage for SBI.

Following this strategic divestment, SBI will continue to hold a 10.8% residual stake in Yes Bank, maintaining a vested interest in the private lender’s future growth. The transaction, which received all necessary statutory and regulatory approvals from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI), also involved a consortium of seven other Indian banks, including HDFC Bank and ICICI Bank. These institutions collectively sold a 6.81% stake to SMBC for ₹4,594 crore.

SBI Chairman CS Setty celebrated the transaction, reflecting on the successful partnership. “The Yes Bank restructuring plan by the RBI in 2020 was an innovative, first-of-its-kind public sector–private sector partnership that was fully supported and facilitated by the Government of India,” he stated. He hailed the original bailout as the “best example of protecting the customer interests of a large bank by collaborative efforts” and expressed pride in Yes Bank’s transformational journey. Setty also extended a welcome to SMBC, a “marquee financial institution,” whose global expertise is expected to be a great complement to Yes Bank’s ongoing progress and future ambitions.

The entry of SMBC, the second-largest banking group in Japan with total assets of about $2 trillion, is seen as a powerful endorsement of Yes Bank’s revived health and the long-term potential of the Indian financial market. The RBI had previously granted approval for SMBC to acquire up to a 20% stake, and reports suggest the Japanese giant is keen to inject further capital, potentially taking on a promoter role in the future. This landmark deal not only provides a lucrative exit for the rescuing banks but also sets a new precedent for foreign investment in India’s banking landscape.

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