Yes Bank Share Price: Private Lender’s Stocks Rally Over 22 Per Cent In 5 Days – Here’s What Triggered The Rally

Shares of Yes Bank jumped as much as 8.4 per cent to Rs 21.70 apiece on the NSE in early trade on May 12, hitting their five month high. With this rally, the private sector lender's shares have surged over 22 per cent in the previous five trading sessions. The sudden rally prompted the BSE (formerly Bombay Stock Exchange) to seek clarification from the Bank regarding any disclosures that it needs to make which haven't been made yet.

Over an year, Yes Bank's shares have delivered around 8 per cent negative returns, significantly underperforming Nifty Bank, which rallied nearly 16 per cent in the same time period.

What Triggered The Rally In Yes Bank Shares

The rally in Yes Bank shares was triggered by media reports which said that Japan's banking giant Sumitomo Mitsui Banking Corporation (SMBC) is expected to buy stakes in the private sector lender. Some reports also claimed that the Reserve Bank of India (RBI) has approved SMBC's bid to buy a controlling stake (51 per cent) in Yes Bank.

SMBC is a Japanese multinational financial services company belonging to the Sumitomo Mitsui Financial Group (SMFG). SMFG is listed in Tokyo and New York stock exchanges and has a net worth of Rs 7.76 lakh crore ($91.7 billion).

As per an Economic Times (ET) report, senior officials of SMBC met with their counterparts from the State Bank of India (SBI) in Mumbai to explore a potential stake purchase in Yes Bank. SBI, which currently is the single largest shareholder in Yes Bank, has been exploring options to reduce its shareholding.

Consequently, on May 6, the bank stock jumped over 9.5 per cent, however, later it retreated to close the day with minor gains after conflicting reports emerged that no such application was filed by the Japanese banking giant with the RBI.

Yes Bank, later on May 6 (during market hours), issued a clarification to the BSE, terming those media reports "speculative" and "not factually correct".

The BSE had asked Yes Bank whether such negotiations were underway. If yes, the exchange requested the Bank to disclose the details of the discussions along with a chronological timeline of events from the beginning of the negotiations to the present date.

Yes Bank replied, "The Bank is on a growth trajectory and routinely explores opportunities with various stakeholders, which are aimed at enhancing shareholder value. However, such discussions are preliminary and do not warrant disclosure under Regulation 30 of the Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015, at this stage. The information pertaining to these discussions as set out in the article is speculative at this time and are not factually correct."

It added, "As mentioned above, we are not aware of any information that has not been announced to the Exchanges, which requires disclosures under Regulation 30 of the SEBI (LODR) Regulations, 2015, at this stage." Following this clarification, Yes Bank shares zoomed 9.8 per cent on May 9.

Sumitomo Mitsui To Buy 20 Per Cent Stakes In Yes Bank

After market hours on May 9, SBI announced it has received approval to sell 413.44 crore equity shares of Yes Bank, representing a 13.19 per cent stake, to SMBC. The shares will be sold at Rs 21.5 each, for a total consideration of around Rs 8,888.97 crore, subject to regulatory and statutory approvals.

The strong rally seen in Yes Bank shares followed this development.   Yes Bank too, through multiple exchange filings, informed that the SMBC will be buying 627.12 crore of its shares from SBI as well as from other banks. These banks include HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank, and Bandhan Bank. These banks, excluding SBI, are collectively paring 6.81 per cent stake in Yes Bank.

As per the shareholding pattern as of May 9, SBI held 23.97 per cent stakes in Yes Bank. Post the share purchase agreement with SMBC, the public lender will be left with 10.78 per cent stakes.

HDFC Bank held 2.75 per cent, ICICI Bank held 2.39 per cent, Kotak Mahindra Bank had 1.21 per cent and Axis Bank had 1.01 per cent stakes in Yes Bank. IDFC First Bank, Federal Bank and Bandhan Bank held 0.92 per cent, 0.76 per cent, and 0.7 per cent stakes, respectively. These banks collectively held 9.74 per cent stakes, which will now be reduced to just 2.93 per cent.

Prashant Kumar, managing director and chief executive officer, Yes Bank said in press release, "We are excited to welcome SMBC, a globally renowned financial partner, as a major shareholder whose investment marks a pivotal step in our next phase of growth. We expect to benefit from their global expertise and high governance standards."