India's SBI aims to sell its Yes Bank stake worth $2.2 bln by end-March, sources say

IDBI Bank

13/08/2024 09:59

By Siddhi Nayak
       MUMBAI, Aug 13 (Reuters) - State Bank of India (SBI),
the country's largest lender, aims to strike a deal by end-March
for the sale of its 24% stake worth 184.2 billion rupees ($2.2
billion) currently in smaller rival Yes Bank  YESB.NS , four
sources with direct knowledge said.
    Japanese lender Sumitomo Mitsui Banking Corp and Dubai-based
Emirates NBD  ENBD.DU  are in advanced talks to acquire a
majority stake in Yes Bank, two of these sources said. Sumitomo
Mitsui is a unit of Sumitomo Mitsui Financial Group  8316.T ,
Japan's second-biggest bank.   
    "Both the bidders are interested in acquiring a majority 51%
stake in Yes Bank to get sizeable control of the bank's
business," one of the sources said. "The Reserve Bank of India
(RBI) has verbally okayed the proposal and due diligence is on."
    Yes Bank was restructured by the RBI in March 2020 with the
help of a consortium of local banks after its financial health
deteriorated.
    SBI currently holds about 24% in Yes Bank while 11 other
lenders, including ICICI Bank  ICBK.NS  and HDFC Bank  HDBK.NS ,
who were also involved in Yes Bank's rescue, together hold
9.74%.
    Two private equity funds - CA Basque Investments and
Verventa Holdings - collectively hold another 16.05%. The
remainder is with some other investors and with the public.
    "Bidders are seeking relaxation on the regulatory
requirement that promoter shareholding be brought down to 26%
within 15 years of the investment, and talks are on," said one
of the sources, referring to the stake by controlling
shareholders. 
    The sources did not wish to be identified as they are not
authorised to speak with the media.
    SBI said it categorically denies any development in this
matter.
    In a response to Reuters' query, Yes Bank said it had "no
comments to offer regarding (the) stake sale as these inquiries
are speculative in nature."
    RBI and Emirates NBD, Dubai's biggest bank, did not
immediately respond to Reuters' emails seeking comment. Sumitomo
Mitsui Banking Corp said it will not comment on "individual
deals".
    Other media earlier reported the interest of Japanese and
Middle Eastern lenders in acquiring SBI's stake in Yes Bank.
    SBI has already received RBI's verbal approval to divest its
whole stake in Yes Bank, one of the sources said, adding that
SBI is expecting to make a profit of around 100 billion rupees.
    "SBI had rescued Yes Bank when there was a liquidity crunch,
but now that things have turned around, it is prudent to exit,"
this person said.
    Once RBI approves the bidders, the process should happen
quickly and SBI will have a chance to negotiate valuation, etc.,
with the bidders, two of the sources said.
    At the current market price of 24.60 rupees, Yes Bank is
valued at 770.95 billion rupees.
    Talks could be delayed due to volatility in the Japanese
market and a parallel government stake sale process in IDBI Bank
 IDBI.NS , a fifth person familiar with the process said.
    Emirates NBD, one of the potential bidders for Yes Bank, has
also expressed interest in buying private lender IDBI Bank and
prefers waiting till that process is concluded, the source
added.
($1 = 83.9600 Indian rupees)

 (Reporting by Siddhi Nayak; Additional reporting by Ira Dugal
in Mumbai and Miho Uranaka in Tokyo; Editing by Muralikumar
Anantharaman)
 ((Siddhi.Nayak@thomsonreuters.com; +91 22 6921 7848; Reuters
Messaging: X: https://twitter.com/siddhiVnayak))