First Abu Dhabi Bank, Mizuho Bank in race for SBI’s stake in Yes Bank

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Within days of State Bank of India putting its 25 per cent stake in Yes Bank on the block, interest is visible from West Asia and Japan.

According to four bankers aware of the matter, UAE’s largest bank, First Abu Dhabi Bank (FAB), and Japan’s leading lender, Mizuho Bank, have shown interest acquiring SBI’s stake in Yes Bank.

While NBD Emirates, also headquartered in the UAE has evinced interest in YES Bank, FAB and Mizuho are said to be leading the race.

Discussions with RBI

It is gathered that Mizuho Bank has appointed Bank of America to run the deal. FAB has had a few rounds of discussions with the Reserve Bank of India on the acquisition under various structures.

The mandate to find a buyer for SBI’s shares has been given to Citibank and, according to sources, the investment bank is reaching out mainly to large foreign investors. “A key directive given to the investment banker is that the deal should fetch top dollar foreign direct investment into the banking space,” said a banker aware of the development.

Also read: Kotak Mahindra Bank: Shedding the underperformer tag may be a tough task

At present, no domestic investor or foreign private equity fund has been approached.

Emails to SBI, Yes Bank, FAB and Mizuho Bank remained unanswered till press time.

Contours of deal

According to latest shareholding pattern of Yes Bank, SBI holds 25.02 per cent. Interested investors have been asked to consider three options vis-a-vis SBI’s stake — take the 26 per cent stake; go up to 49 per cent which would involve making an open offer after taking over SBI’s stake; and, last, if the investor is keen on a simple majority shareholding of 51 per cent, apply to the Reserve Bank of India.

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The RBI’s 2016 master direction on ownership in private sector banks allows foreign investment from all sources, that is, FDI, foreign institutional investors, and non-resident Indians, up to 74 per cent of the paid-up capital.

FAB and Mizuho Bank have branch operations in India. They operate in corporate finance and global transaction banking, catering to large overseas corporate customers. However, globally, FAB and Mizuho are known for their retail banking strengths and FAB specifically for its credit card products.

YES Bank bailout

To put things in perspective, in March 2020, SBI led the consortium of banks that bailed out Yes Bank when it was placed under moratorium. SBI picked up 48 per cent, while HDFC Ltd and ICICI Bank took 10 per cent each with Axis Bank, Kotak Mahindra Bank, IDFC First, Federal Bank and Bandhan Bank picking up smaller stakes. Collectively, the eight banks held about 75 per cent in Yes Bank.

According to the latest stock exchange data, apart from SBI, Axis Bank, Kotak Mahindra Bank, ICICI Bank and HDFC Bank together hold 7.7 per cent in Yes Bank.

Yes, there’s much interest!
  • UAE’s First Abu Dhabi Bank and Japan’s Mizuho Bank said to have interest to acquire SBI’s 25% stake in Yes Bank
  • Citibank handling the mandate to find buyer for SBI’s stake
  • I-bank presently reaching out to large foreign investors for this purpose
  • Interested investors asked to consider three options:
  • Acquire 26 per cent stake in Yes Bank
  • Increase stake to 49 per cent stake through open offer
  • Seek RBI okay to acquire 51 per cent stake in Yes Bank