In August, SMBC received approval from the Reserve Bank of India to buy up to a 24.99% stake in Yes bank from the State Bank of India and seven other shareholders, after signing a deal in May to buy a 20% stake for US$1.6 billion, in the country’s largest cross-border merger and acquisition of the country’s financial sector. | Photo credit: REUTERS/AINNIE ARIF
Japanese lender Sumitomo Mitsui Banking Corporation has no immediate plans to increase its stake in Yes Bank above 24.99%, a senior executive at the bank said. Reuters on Friday.
The initial purchase, announced in May, marked the latest major foreign investment by a Japanese financial institution as it seeks to secure new sources of growth after years of rock-bottom interest rates at home.
However, SMBC is moving cautiously with its biggest investment in India, contrary to analyst expectations that it would quickly seek approval for a further increase in its stake and launch an open offer.
In his first interview since the deal closed in September, Rajeev Kannan, group managing director and head of SMBC Group’s India division, said the bank is focused on contributing to Yes Bank’s growth as its largest shareholder and board member, and does not plan to take on an executive role at the lender.
“We are not actively looking at increasing our stake in Yes Bank beyond the regulatory limit of 24.99%,” Kannan said. “There are many areas that Yes Bank still needs to work on, and we need to ensure that those areas, which they have a plan to address, are implemented.”
Kannan said Yes Bank needs to improve cost of funds, return on assets and return on equities compared to its peers.
The bank’s current stake in Yes Bank stands at 24.2%.
Under Indian takeover rules, acquiring 25% or more in a listed company triggers a mandatory open offer to buy at least another 26% from public shareholders, potentially resulting in a 51% majority stake.
In August, SMBC received approval from the Reserve Bank of India to buy up to a 24.99% stake in Yes bank from the State Bank of India and seven other shareholders, after signing a deal in May to buy a 20% stake for US$1.6 billion, in the country’s largest cross-border merger and acquisition of the country’s financial sector.
Kannan said State Bank of India has agreed to remain a major shareholder with the current shareholding of 10.8%.
Shares of Yes Bank fell over 4% to ₹22.1 after the report. Before the news, they were trading 0.8% lower. The bank’s shares are still up more than 20% since the deal was announced in May this year.
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The group, which has investments worth $7 billion in India, plans to keep its existing non-bank lending business SMFG Credit separate from its investment in Yes Bank.
“We have invested significantly in the NBFC platform and our intention is to scale it,” Kannan said.
“In the future, there is a possibility that things might become more integrated. But we have not focused on that in principle. Our intention at this point is to look at each entity on its own merits,” he said.
SMFG Credit had assets under management totaling $6.5 billion as of March 31, 2025.
Kannan said the group has not applied to set up a wholly owned subsidiary in India and is continuing to evaluate the plan.
India’s banking regulator encourages, but does not mandate, foreign banks to set up ‘wholly owned’ subsidiaries in India by granting them rights similar to domestic banks.
A wholly owned subsidiary has capital that is shielded from the parent bank.
SMBC Group also sees opportunities in the wealth management and investment banking business in India, through Yes Bank and its securities platform. The group could also see the asset management business as a growth area in the future, given its stake in Sumitomo Mitsui DS Asset Management, Kannan said.
Published on October 17, 2025
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