SBI to sell 13.19% stake in YES Bank to Sumitomo Mitsui Banking Corporation

State Bank of India (SBI), the country's largest lender, will sell 13.19% stake in YES Bank to Japanese financial services firm Sumitomo Mitsui Banking Corporation (SMBC). SBI will sell stake at ₹21.50 per equity share for a total consideration of ₹8,889 crore, the bank said in a stock exchange filing post market hours on Friday.

The deal is expected to be completed in 12 months.

At the end of March quarter, SBI held 23.97% stake in YES Bank and after the deal gets executed its stake in the bank will come down to 10.78%

YES Bank shares ended 9.77% higher at ₹20 ahead of the corporate announcement by SBI.

Earlier this week, YES Bank had denied reports which suggested that it was in talks for a stake sale. Yes Bank on Tuesday clarified that its discussions with various stakeholders, aimed at enhancing shareholder value, were routine and currently at a preliminary stage.

The clarification from the Mumbai-based lender came after SMBC received approval from the Reserve Bank of India (RBI) to acquire a 51% stake in the bank.

SBI acquired stake in YES Bank in March 2020 as part of rescue plan for the troubled lender. YES Bank faced severe financial crisis due to mounting non-performing assets and governance issues. The Reserve Bank of India intervened by imposing a moratorium on the bank's operations and suspending its board.

However, to restore public confidence and prevent a systemic failure the RBI devised a reconstruction scheme. Under the reconstruction plan, SBI along with other financial institutions infused capital into YES Bank.

SBI initially acquired 48.2% in YES Bank, committing to hold at least 26% for a minimum three years. Kotak Mahindra Bank, Axis Bank, ICICI Bank and HDFC Bank are also among the prominent banks holding stakes in YES Bank. Life Insurance Corporation of India also holds stake in YES Bank.