Banks led by State Bank are set to miss their target to pare their holdings in Yes Bank by March next, which they bought as part of the Reserve Bank-led rescue in March 2020, since the regulator is uncomfortable with the idea of letting management control go to foreign hands. The move is to stall the Japanese financial services major Sumitomo Mitsui Banking Corporation (SMBC) which is keen to own at least 51 percent in the mid-tier lender.
While SBI owns a 24 percent stake in Yes Bank and has put the entire stock on the block, 11 other banks including ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, collectively hold 9.74 percent. Two private equity players -- CA Basque Investments and Verventa Holdings -- collectively hold another 16.05 percent.
At the current share price, SBI can walk away Rs 18,420 crore for its 24 percent stake.
Earlier in August, there were reports quoting named RBI officials saying that the regulator has asked investors seeking a controlling stake in Yes Bank to reconsider their demand, including acquiring and retaining a majority stake.
The RBI's reluctance is expected to delay the stake sale which was earlier expected to be completed by the fourth quarter of the fiscal.
The Dubai-based Emirates NBD, which is the largest lender in the UAE, is also interested in the bank and is in advanced talks to acquire a majority stake.
SMBC, which is the second-biggest Japanese bank, is directly negotiating with the RBI on this, but the regulator is "not willing to relent on ownership control", a source in the know of the development said here Thursday.
He further said SMBC is showing lot of interest in the bank, but talks have currently hit a roadblock because the Japanese group is very firm on acquiring 51 percent.
“After the initial discussions with the RBI, potential bidders have been asked to review their stance on certain important terms of the deal,” the source said.
The RBI licensing norms mandate the promoters to reduce their stake to 26 percent within 15 years of starting operations.
To address this, the RBI has proposed a gradual glide path for investors to reduce their stake in Yes Bank over time, indicating that maintaining a perpetual 51 percent holding may not be possible.