Recently, State Bank of India made headlines by announcing the sale of its 25 per cent stake in Yes Bank. This move has attracted interest from prominent financial institutions in West Asia and Japan.

The two frontrunners in the race for acquiring SBI’s stake in Yes Bank are UAE’s First Abu Dhabi Bank (FAB) and Japan’s Mizuho Bank, according to sources familiar with the matter.

While NBD Emirates from the UAE has also displayed interest in Yes Bank, FAB and Mizuho Bank are currently leading the competition.

Key Points Discussed:

  • Interest from First Abu Dhabi Bank and Mizuho Bank in acquiring SBI’s 25% stake in Yes Bank
  • Citibank entrusted with finding a buyer for SBI’s stake
  • Currently reaching out to major foreign investors for potential deal

Discussions with Regulatory Bodies:

Mizuho Bank has reportedly engaged Bank of America to oversee the transaction. On the other hand, FAB has been in talks with the Reserve Bank of India regarding the acquisition under different structures.

The responsibility of identifying a buyer for SBI’s shares lies with Citibank, which aims to attract significant foreign direct investment into the banking sector, as per sources aware of the situation.

Details of the Potential Deal:

As per the current shareholding pattern, SBI holds a 25.02 per cent stake in Yes Bank. Interested parties are urged to consider three options in relation to SBI’s stake – either acquire a 26 per cent stake directly, increase the stake to 49 per cent through an open offer, or seek approval from the RBI to hold a majority 51 per cent stake.

The RBI guidelines allow foreign investment up to 74 per cent of the paid-up capital from various sources, including FDI, foreign institutional investors, and NRIs.

Background on FAB and Mizuho Bank:

Both FAB and Mizuho Bank maintain branch operations in India, offering services in corporate finance and global transaction banking to international corporate clients. While renowned for their retail banking services, FAB is particularly recognized for its credit card products.

Recap of Yes Bank’s Recent Bailout:

In March 2020, SBI led a consortium of banks in rescuing Yes Bank during its moratorium phase. SBI acquired a 48 per cent stake, with HDFC Ltd, ICICI Bank, and several others also investing in the troubled bank. Currently, apart from SBI, Axis Bank, Kotak Mahindra Bank, ICICI Bank, and HDFC Bank collectively possess a 7.7 per cent stake in Yes Bank.