Boost for balance sheet: Japanese banking giant Sumitomo Mitsui lines up Rs 16,000 cr more for fitter Yes Bank

Live Events as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: Japanese financial giant Sumitomo Mitsui Banking Corp (SMBC) is set to invest Rs 16,000 crore ($1.83 billion) in Yes Bank through a combination of equity and debt, according to people familiar with the matter. This proposed infusion is intended to strengthen Yes Bank’s balance sheet and is seen as a precursor to SMBC taking an ownership position.This is in addition to the Rs 13,500 crore SMBC has committed to pay existing shareholders, led by State Bank of India (SBI), for acquiring a 20% stake in the private bank.SMBC, which is among the top three largest Japanese banks with a presence in 39 countries, is also working on setting up a wholly owned subsidiary to acquire a majority stake in Yes Bank, said people cited above. The Rs 16,000 crore will be reflected in Yes Bank’s books, while the Rs 13,500 crore will be paid to investors to facilitate their exit.“SMBC will infuse low-cost, long-term funding through yen-denominated bonds equivalent to Rs 8,500 crore, priced below 2%,” said one of the people cited. “This will significantly reduce Yes Bank’s overall cost of borrowing. Additionally, Rs 7,500 crore will be invested as equity, likely in the form of foreign currency convertible bonds (FCCBs). This will boost its capital.”SMBC and Yes Bank are currently in the process of seeking Reserve Bank of India (RBI) approval for the issuance of the FCCBs.Yes Bank, SMBC and RBI didn’t respond to queries.Yes Bank’s shareholders had approved this raise last Thursday.Two days later, SMBC received RBI approval to acquire up to 24.99% stake in the bank once owned by Rana Kapoor. Of this, SMBC will acquire 20% from domestic banks. However, it is yet to finalise how it will raise the stake by 4.99%. SMBC is weighing the options of negotiating with private equity investors Advent and Carlyle, and subscribing to fresh equity issuance. Advent and Carlyle currently hold stakes in Yes Bank through their investment arms Verventa Holdings (9.2%) and CA Basque Investments (4.2%), respectively.While RBI has approved the Japanese company’s acquisition of up to 24.99%, it has not granted the Japanese group promoter status. “This is under review and requires a larger commitment and completion of certain formalities. SMBC is keen on securing promoter status,” said one of the people cited.The low-cost funding is expected to help Yes Bank improve its net interest margin (NIM), which stood at 2.5% as of June 2025—among the lowest in the sector.