Yes Bank‘s proposed stake sale is reportedly encountering difficulties as the Reserve Bank of India (RBI) insists on adherence to local banking norms by the potential buyers.
What Happened: The Reserve Bank of India (RBI) has asked investors interested in acquiring a controlling stake in Yes Bank to reconsider their demands, which could delay the deal process, Moneycontrol reported, citing sources.
The investors’ main requests include holding a 51% stake in the bank indefinitely and having voting rights equivalent to their 51% stake. However, these demands conflict with bank licensing norms that require promoters to reduce their stake to 26% within 15 years of starting operations and cap voting rights at 26%.
Given the central bank’s initial feedback, the investors are likely reevaluating the viability of investing in Yes Bank. First Abu Dhabi Bank and Japan’s Mizuho Group, who have reportedly shown interest in acquiring a controlling stake in Yes Bank, are expected to respond to the regulator soon.
However, First Abu Dhabi Bank reportedly clarified that it is not looking to acquire a stake in the bank.
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Moreover, foreign direct investment norms do not allow a single foreign bank to take a controlling stake in an Indian bank, adding another layer of complexity to the deal. Therefore, the deal, initially expected to conclude by December, may take longer.
The company did not respond to Benzinga's request for comment at the time of publishing.
The development comes after Yes Bank denied media reports of a majority stake sale in July 2024, calling them “factually incorrect” and “speculative in nature”. The bank clarified that the RBI had not given any in-principle approval for such a sale, as stated in the media reports.
In the same month, it was reported that the State Bank of India (SBI) was planning to sell its entire 23.99% stake in Yes Bank, four years after it rescued the lender. SBI had yet to find a suitable buyer but preferred international investors for the stake sale.
Price Action: Shares of Yes Bank were down 2.85% at ₹25.53 on Friday afternoon.
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