Yes Bank Shares Drop: Rajeev Kannan, who is the group executive officer and head of SMBC Group’s India division, said the bank is not planning to take a bigger stake in Yes Bank or take any management role in it.
He said the company only wants to help Yes Bank from the board level as its biggest shareholder. “We are not actively looking at increasing our stake in Yes Bank beyond the regulatory permissible limit of 24.99%,” Kannan said. He also added, “There are many areas which Yes Bank still needs to work on, and we need to ensure that those areas, which they have a plan to address, are being executed.”
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SMBC Keeps Focus on Governance
Right now, SMBC owns 24.2% of Yes Bank. This makes it the largest shareholder of the Indian lender. At 1:40 pm on October 17, the shares of Yes Bank were trading 4.3% lower at Rs 22.12 on the NSE. There had been talks that SMBC might increase its share in Yes Bank and could even go for a full takeover. But Kannan’s comments now make it clear that SMBC wants to stay below the 25% mark.
As per India’s takeover laws, any investor who buys 25% or more in a listed company has to make a mandatory open offer to purchase at least another 26% from public shareholders. That would mean owning a majority of 51%. SMBC does not want to reach that stage. Analysts had earlier expected that SMBC might try to increase its holding and launch an open offer but now that plan seems unlikely.
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SMBC’s Big Investment in Yes Bank
In August the Reserve Bank of India gave SMBC approval to buy up to 24.99% of Yes Bank. This stake was to be purchased from the State Bank of India and seven other shareholders.
The deal was first announced in May when SMBC agreed to buy 20% of Yes Bank for $1.6 billion. It became India’s biggest cross-border deal in the financial sector. Since the announcement on May 9, Yes Bank’s share price has gone up more than 20%.
