Yes Bank’s share price jumped 3% on Tuesday after a Bloomberg report indicated that the Sumitomo Mitsui Financial Group (SMFG) is considering an additional investment of $1.1 billion in the bank.
The report came two months after the SMFG purchased a 20% stake in Yes Bank, signalling it’s deepening commitment to India’s fast-growing financial sector.
If the deal is finalized, SMFG will pick up around 5% of Yes Bank’s shares, which would be bought from Carlyle Group and a few other smaller investors.
In a parallel move, SMFG is also said to be considering an investment of nearly $680 million in Yes Bank’s convertible bonds, a step that could significantly bolster the private lender’s expansion plans.
Together, these steps could lift SMFG’s stake in Yes Bank to just under 25%, carefully stopping short of the 26% mark that would trigger a mandatory open offer for another 25% under Indian regulatory norms.
Consolidating influence
This proposed investment follows SMFG’s earlier move in May 2025, when it picked up a 20% stake in Yes Bank for around $1.6 billion.
That transaction made SMFG the bank’s largest shareholder and gave it the authority to appoint two board members, a step that significantly deepened its influence over the bank’s strategic decisions.
SMFG’s growing involvement with Yes Bank is part of a larger pattern of Japanese banks stepping up their presence in India’s financial landscape.
With a vast, still largely untapped market and economic growth expected to stay above 6% annually through FY27, India is becoming an increasingly appealing destination for foreign investors looking for long-term opportunities.
Yes Bank’s recovery in recent years has been noteworthy. Following a severe bad loan crisis in 2020 that prompted a rescue led by SBI and a consortium of investors, the bank has steadily rebuilt itself.
Improvements in asset quality and a return to consistent profitability suggest that the worst is behind it, marking a clear shift in its operational trajectory.
Yes Bank share price may remain volatile
If the deal goes through, SMFG’s total investment in Yes Bank would climb to $2.7 billion, firmly establishing it as the bank’s largest shareholder.
The partnership stands to benefit both sides: Yes Bank gets a well-capitalized backer with international banking experience, while SMFG strengthens its presence in one of the world’s most promising emerging markets.
However, analysts and investors still maintain a cautious stance on Yes Bank’s share price as both ICICI Securities and Emkay Global Financial Services continue to maintain ‘sell’ ratings on Yes Bank, with target prices of ₹20 and ₹12, respectively.
The predominant negative ratings stem from ongoing concerns around the bank’s ability to sustain profitability, its relatively heavy reliance on wholesale deposits, and muted return ratios, even as asset quality and capital buffers have shown signs of improvement.
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