RBI approves 51% stake sale in Yes Bank

9 Jul 2024 , 10:37 AM

The Reserve Bank of India (RBI) has approved the sale of up to 51% stake in Yes Bank, enabling new ownership for the private lender that faced a crisis four years ago.

Sources reported that a potential sale could value Yes Bank at approximately $10 billion, marking the largest acquisition in India’s banking sector.

At the time of writing on July 9, 2024 at 1:34 pm, shares of Yes Bank is trading at ₹26 which is a 1.04% gain than the previous close. The stock has gained a total of 52% in the last one year, and 14% since the beginning of the year.

The RBI gave preliminary approval to Yes Bank and its key shareholders, allowing a 51% stake sale, which is unusual as RBI typically limits promoter holding in domestic banks to 26%.

Some bidders are interested only if they can acquire a 51% stake. The RBI agreed to this as a special case while assessing the fit and proper criteria for potential new promoters.

Formal written approval from RBI is pending as it evaluates the suitability of prospective bidders. This decision reflects the RBI’s recognition of Yes Bank’s unique circumstances, including its shareholder composition, loan portfolio, and liquidity needs.

Yes Bank has hired Citigroup to identify potential promoters. Citigroup has declined to comment on the matter. State Bank of India (SBI) and other lenders, controlling 33.74% in Yes Bank, now have an exit route due to the RBI clearance.

SBI owns 23.99% in Yes Bank. Other shareholders include HDFC Bank (2.75%), ICICI Bank (2.39%), Kotak Mahindra Bank (1.21%), Axis Bank (1.01%), LIC (3.98%), CA Basque Investments (8.74%), and Verventa Holdings (9.21%). The total shares held by banks in Yes Bank decreased from 36.74% in March to 35.18% in April. The RBI has advised some banks not to sell their shares on the open market.