Early trading this week shows that YES Bank shares increased by 10 percent after Japan's Sumitomo Mitsui Banking Corp (SMBC) had been approved by the RBI to acquire a 51 percent stake in the private lender.

SMBC may be expected to conduct a merger through share swapping and purchase less than 26 percent of the company. According to reports, it may also initiate an open offer and purchase up to 26 percent of the company.

SMBC was in advanced talks to acquire a sizeable portion of the sixth-largest private bank in terms of assets. SMBC's open offer for a further 26 percent stake was expected to be triggered.

After the event, YES Bank's stock rose 9.64 percent to reach a peak of Rs 19.44 on the BSE, reducing its losses for the year to just five percent. Over the last year, the stock has dropped 22 percent, and over the last five years, it has dropped 30 percent.

Conversely, SBI shares were down 0.79 percent at Rs 783.75 on the BSE.

Last year, reports observed that the negotiations to buy a majority interest in YES Bank were reportedly underway between Dubai-based Emirates NBD and Japanese lender SMBC. 

 

The second-biggest bank in Japan, Sumitomo Mitsui Financial Group, is the parent company of SMBC. It was understood, meanwhile, that the banking regulator had not yet given final "fit and proper" permission and was allegedly opposed to the idea of a foreign company purchasing more than 51 percent of YES Bank.

According to reports, one of the possible sellers was SBI, which held a 24 percent share in YES Bank. It was unknown which of the other financial organizations would decide to leave, according to The Economic Times. According to the article, SMBC is anticipated to become the single-largest shareholder in the event that a deal is reached and an open offer is made.

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Kotak Mahindra Bank, Axis Bank, ICICI Bank, and Life Insurance Corporation of India (LIC) were among the domestic institutions that held an 11.34 percent interest in YES Bank as of March 31. Carlyle and Advent International, two private equity groups, owned 6.84 percent and 9.2 percent of the company, respectively.