YES Bank saw its share price jump as much as 8.7% in early morning trade on Monday after Japan’s Sumitomo Mitsui Banking Corp. (SMBC) signed a definitive agreement to acquire a 20% equity stake in the private lender for RS 13,483 crore ($1.6 billion) The SMBC deal marks the largest cross-border investment in India’s banking sector to date.



YES Bank’s stock touched an intraday high of RS 21.74 on the BSE, while gaining 8.39% to RS 21.70 on the NSE, lifting the lender’s market valuation by over RS 1,400 crore, at its peak. The scrip’s rally was pushed largely due to investor optimism over the foreign capital infusion and strategic credibility that SMBC’s entry brings to the Mumbai-based bank. However, gains moderated through the session. As of 12:14 pm IST, YES Bank shares had pared most of the early rally, trading up 2.2% at RS 20.46. The stake sale — announced Friday — will see State Bank of India (SBI) offload 13.19% of its stake for RS 8,889 crore, while a consortium of seven other Indian banks, including ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank, will jointly dilute 6.81% for RS 4,594 crore. SBI and these lenders had rescued YES Bank under the RBI-led reconstruction scheme in March 2020.



SMBC is one of Japan’s largest and most prominent commercial banks, with its headquarters in Tokyo. A core unit of the Sumitomo Mitsui Financial Group (SMFG), SMBC offers a wide range of financial services including corporate banking, project finance, retail banking, and global trade solutions. Post-deal, SMBC will emerge as YES Bank’s single largest shareholder, signalling long-term commitment and strategic interest from Japan’s second-largest bank by assets. Market participants view the deal as a potential pivot point for YES Bank, an entity which for years had struggled with concerns over quality of its banking assets. The bank has been plagued also with corporate governance issues in recent years. Analysts say, the SMBC deal could prove pivotal in improving the bank’s standing amongst its peers.