SEBI Investigates Yes Bank's Disclosures Amid SMBC Stake Acquisition

The Securities and Exchange Board of India (Sebi) is reportedly probing the disclosures made by Yes Bank regarding its ongoing share sale to Sumitomo Mitsui Banking Corporation (SMBC), as per sources cited in a Moneycontrol report.

On Thursday, the shares of Yes Bank concluded the trading session at Rs 21.53 price level, up by over 2.7% on the National Stock Exchange. The disclosure under scrutiny is Yes Bank’s response to the bourses (on May 6) around media reports on the prospective SMBC deal, as per sources cited in the report. Following these reports, the shares of Yes Bank witnessed a jump of 9 per cent.

However, the bank had called these reports 'speculative' and 'not factually correct'.

“The bank is on a growth trajectory and routinely explores opportunities with various stakeholders, which are aimed at enhancing shareholder value. However, such discussions are preliminary and do not warrant a disclosure under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, at this stage,” the company said in a May 6 exchange filing.

However, on May 9, Yes Bank disclosed that it had signed a share purchase agreement with SMBC, wherein the Japanese company would buy a 20% stake.

“Sebi’s market rumour verification rules mandate true disclosure of the ongoing deals. The share purchase agreement was signed within three days of the Yes Bank response giving an indication that the deal was in advanced stage on May 6,” sources told Moneycontrol.

“However, investment bankers and legal advisers handling the deals generally advise against premature disclosure of deals. One needs to examine what was the status of the deal as on May 6,” the sources added.

According to the May 9 filing, SMBC would buy over 413 crore shares, which makes up around 13.9% of Yes Bank’s total share base. Other domestic banks, including HDFC, ICICI and Kotak Mahindra bank, also agreed to sell their shares to SMBC.

“Yes Bank shares have soared nearly 15 per cent since May 9, indicating the information was materially price sensitive. All the standard disclosure protocols of Sebi needs to be followed in this regard,” another source stated.