Yes Bank, Other Bank Stocks Soar after Japan-based Lender Buys 20% Stake in Yes Bank

Shares of Yes Bank opened over 8% higher on the National Stock Exchange today after Japan-based Sumitomo Mitsui Banking Corporation acquired a 20% stake in the bank through a secondary stake purchase. The Nikkei-listed company bought over 13% from the State Bank of India, while the remaining 7% stake was acquired from other lenders—HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank, and Bandhan Bank.

However, the market had been expecting a 26% stake acquisition by the Japanese lender, which would have triggered an open offer for an additional 26%. Although this would have raised its stake above 50%, its voting rights would still be capped at 26%.

The capital pullback by foreign banks from their subsidiaries in other countries during the Lehman crisis left many emerging markets struggling, leaving central banks wary. The RBI caps promoter stakes in any bank at 26%, while individual foreign bank holdings in domestic private banks are limited to 15%, except in the case of distressed banks.

Moreover, the central bank has capped voting rights for a single entity at 26%, a key constraint that has deterred many foreign banks. According to a CNBC-TV18 report, Sumitomo Mitsui may consider merging its subsidiary SMFG Credit with Yes Bank, potentially allowing it to raise its stake in the merged entity.

For Yes Bank, the deal brings stability, as the lender will now have a long-term promoter for the first time in five years. SBI had only intended to be a temporary shareholder. The deal could also help the lender raise capital for further growth.

Shares of other Indian banks involved in the transaction also rose 2–4% by 11:35 am today, as proceeds from the deal are expected to boost their earnings for the current financial year.

Prior to this transaction, SBI held a 24% stake in Yes Bank, while other lenders collectively held 10%. These sellers have clearly benefited, having purchased Yes Bank shares at RS 10 and exited at Rs 21.50—earning a return of approximately 115% over five years.

According to CNBC-TV18, IIFL analysts estimate SBI's profit will rise by 7.5% in FY26 due to this deal. In addition, the release of capital previously set aside for Yes Bank exposure will further strengthen SBI’s balance sheet. Other sellers like IDFC First Bank, Federal Bank, and Bandhan Bank are also expected to see a 5–7% increase in profits this year.