YESBANK

Adds comments from Reliance Group source in paragraphs 5-6, government source in paragraphs 18, 19

By Nikunj Ohri

NEW DELHI, July 24 (Reuters) - India's financial crime-fighting agency searched 35 locations linked to Reliance Anil Ambani Group as part of an investigation into alleged money laundering and siphoning of public funds, a government source said on Thursday.

The Enforcement Directorate alleges the group orchestrated a "well-planned" scheme to siphon off 30 billion rupees ($350 million) in loans from YES Bank YESB.NS to many shell companies between 2017 and 2019, the source said on condition of anonymity, as he was not authorised to speak to the media.

Anil Ambani's Reliance Group entities are accused of paying bribes to YES Bank officials before loans were disbursed, the source said, adding that loan approvals violated the bank’s processes.

The probe also found gross violations in YES Bank’s loan approval process, such as lending to companies with weak financials, backdating credit memos, "evergreening" loans - issuing fresh loans to avoid labelling assets as non-performing - and misrepresenting financials.

A Reliance Group source said YES Bank had granted loans to Anil Ambani's entities after following the due process, and the entire exposure was fully secured.

The allegation that bribes were given to secure loans was incorrect, the source said, adding that Reliance Home Finance (RHFL) extended fully secured loans on merit to privately-held companies of Rana Kapoor, the erstwhile promoter of YES Bank.

These loans were fully repaid, including interest, the source said.

Representatives for Reliance Group and YES Bank did not respond to requests for comment.

Several group firms of Anil Ambani, the younger brother of billionaire Mukesh Ambani, have gone into bankruptcy since 2017.

YES Bank, from which Anil Ambani group firms had borrowed heavily, was declared insolvent in 2020 and rescued by a group of Indian lenders in a plan approved by the central bank. Japan's Sumitomo Mitsui Banking Corp is seeking a 20% stake in a deal that has yet to get regulatory approval.

Kapoor was charged with bank fraud by the financial crime agency in 2020 and later arrested. He pleaded not guilty and was granted bail in 2024 by a special court in India's financial capital of Mumbai, according to local media reports.

REGULATORY ACTIONS

The financial crime agency can now seize or attach assets of Anil Ambani entities as the "proceeds of crime", said Debopriyo Moulik, a lawyer at India's Supreme Court. However, the group companies can challenge the agency's findings in court, he said.

Anil Ambani's group entities have been subject to several regulatory actions in recent years. In August 2024, the markets regulator SEBI barred Anil Ambani and 24 others from securities markets for five years, citing fund diversion from Reliance Home Finance.

The markets regulator has shared findings of its investigation on Reliance Home Finance with the financial crime agency, which is likely to investigate a sharp rise in corporate loans granted by the finance company, the source said.

Shares of Reliance Infrastructure RLIN.NS and Reliance Power RPOL.NS fell as much as 5% on Thursday after the news of the latest probe.

The companies issued similar statements to Indian stock exchanges saying the agency's actions "have absolutely no impact on the business operations, financial performance, shareholders, employees, or any other stakeholders" of the two companies.

"The media reports appear to pertain to allegations concerning transactions of Reliance Communications Limited (RCOM) or Reliance Home Finance Limited (RHFL) which are over 10 years old," the statements said.

However, the government source said the agency's investigation found Reliance Infrastructure diverted over 100 billion rupees disguised as inter-corporate deposits (ICD) to other Reliance group entities through an undisclosed, but related entity. ICDs are unsecured loans extended by one company to another.

An undisclosed related entity was used to bypass approvals from shareholders and the audit committee, the source said. The Reliance Group did not immediately respond to a separate Reuters' request seeking a comment on these allegations.

Reliance Group's businesses range from defence to power and infrastructure, although Ambani himself is not on the boards of any listed entities, following orders passed by the market regulator, which Ambani has challenged.

($1 = 86.3300 Indian rupees)

(Reporting by Nikunj Ohri in New Delhi; Writing by Shubham Batra; Editing by William Mallard and Rachna Uppal)

(([email protected]; X: @MukherjeeHritam;))

The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Updates to add graphic.

By Shritama Bose

MUMBAI, July 22 (Reuters Breakingviews) - State Bank of India SBI.NS looks like it's about to become a more frequent capital raiser. This week the country's largest lender, which is 57%-owned by New Delhi, sold 250 billion rupees ($2.9 billion) worth of shares. The rationale was to increase its equity ratios. Yet, even though the deal is India's largest-ever secondary stock placement to institutions, it hardly moves the needle. Ideally, a company wanting to bolster its balance sheet would trim dividends first. But the government wants state-run companies to bump up these payments by 25%.

Oddly, the bank doesn't appear to need to increase its capital. At 10.8%, its common equity Tier 1 (CET1) ratio is above the regulatory minimum of 8.8%. SBI Chair C.S. Setty said in May the bank has enough "firepower" as it stands to grow its loan book by up to 8 trillion rupees ($93 billion), or 19%.

The issue seems to be that SBI's CET1 ratio is below the 14% average for the Indian banking sector and even further behind the 16% and 18% buffers at privately held peers ICICI Bank ICBK.NS and HDFC Bank HDBK.NS. Since both those rivals trade at higher multiples to book than SBI, there's some logic to wanting to catch up.

The share sale doesn't get it very far, though. SBI has some $421 billion of risk-weighted assets, so the extra $2.9 billion only takes its CET1 ratio to 11.5%.

The additional capital has another effect of reducing the lender's return on equity: apply it to the most recent financial year, and the 17% ROE, per LSEG, would drop by just under a percentage point. That would, on paper, still leave it besting HDFC's 14% showing and lagging ICICI's 18%. But both are cranking out those numbers with much higher capital. Moreover, SBI's ROE is looking harder to sustain with bank credit growing at just over 9%, its slowest pace in three years.

Perhaps Setty and his executives are comfortable with only slightly narrowing its capital gap to peers. Assuming they're not, they have two options: sell more shares or sell more assets. Earlier this year, for example, SBI offloaded a 13% stake in Yes Bank YESB.NS to Sumitomo Mitsui Financial Group 8316.T. The lender could follow that up with peddling its remaining 11% chunk in Yes, or selling or listing its general insurer and its asset management subsidiary.

That'll keep SBI and its bankers busy for a while.

Follow Shritama Bose on LinkedIn and X.

CONTEXT NEWS

State Bank of India on July 21 said it had completed a sale of shares worth 250 billion rupees ($2.89 billion) to institutional investors. Books were covered 4.5 times, and foreign long-term investors bought 24% of the float, the lender said.

SBI priced the issue at 817 rupees per share, a 1.8% discount to the closing price of 831.70 rupees on July 16, IFR reported on July 18, citing unnamed people with knowledge of the transaction.

Demand for the transaction was led by domestic institutions, with state-backed Life Insurance Corporation of India committing 80 billion rupees, per IFR. Nomura, Marshall Wace, Millennium, HDFC Mutual Fund, Quant Mutual Fund and ICICI Prudential Mutual Fund also participated in the issue, the report added.

(Editing by Antony Currie; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on BOSE/[email protected]))

July 15 (Reuters) -

• SMFG SAID TO EYE $1.1 BILLION ADDITIONAL INVESTMENT IN YES BANK - BLOOMBERG NEWS

Source : https://tinyurl.com/yc6yexpe

Further company coverage: 8316.T

(([email protected];))

June 23 (Reuters) - Reliance Infrastructure Ltd RLIN.NS:

• RELIANCE INFRASTRUCTURE LTD - JR TOLL ROAD PAYS 2.73 BILLION RUPEES DEBT TO YES BANK

Source text: ID:nBSE8Hz8tt

Further company coverage: RLIN.NS

(([email protected];))

June 17 (Reuters) - Yes Bank Ltd YESB.NS:

• RECEIVED 780 MILLION RUPEES FROM A SINGLE TRUST , IN SECURITY RECEIPTS PORTFOLIO

Further company coverage: YESB.NS

(([email protected];;))

June 13 (Reuters) - Yes Bank Ltd YESB.NS:

• MOODY'S RATINGS: UPGRADES INDIA'S YES BANK TO BA2 FROM BA3; CHANGES OUTLOOK TO STABLE

Source text: [ID:]

Further company coverage: YESB.NS

(([email protected];;))

June 4 (Reuters) - Indian lender Yes Bank YESB.NS has approved proposals to raise up to 160 billion rupees ($1.87 billion) through equity and debt issuances, it said late on Tuesday.

It plans to raise up to 75 billion rupees in equities and 85 billion rupees by issuing debt in Indian or foreign currency, the bank said, with the overall equity dilution - including any future conversion of debt into shares - capped at 10%.

The private lender did not specify what it would use the funds for.

Last month, Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) agreed to acquire a 20% stake in the Indian lender from eight existing shareholders, including the State Bank of India SBI.NS.

The Sumitomo deal, valued at 134.8 billion rupees ($1.58 billion), marked the largest cross-border merger and acquisition deal in India's financial sector.

($1 = 85.6480 Indian rupees)

(Reporting by Aleef Jahan in Bengaluru; Editing by Janane Venkatraman)

(([email protected]))

** Yes Bank YESB.NS shares fall 8.6% to 21.28 rupees

** YESB top pct loser on Nifty Private Bank index .NIFPVTBNK, which is down 0.7%

** More than 756 million shares traded in 260 block deals on NSE at 21.07-22.93 rupees apiece, a 1.5%-9.5% discount to last close of 23.28 rupees - as per data compiled by LSEG

** Stock set to snap three sessions of gains

** Overall trading volume at 1.03 billion shares, 5.8x the 30-day average

** Separately, bank to consider raising funds today via issuance of shares, debt securities

** YTD, stock up 8.6%

(Reporting by Vijay Malkar)

(([email protected];))

May 28 (Reuters) - Yes Bank Ltd YESB.NS:

• YES BANK LTD - BOARD MEETING SCHEDULED FOR JUNE 03 TO CONSIDER FUND RAISING

Further company coverage: YESB.NS

(([email protected];))

May 9 (Reuters) - State Bank of India SBI.NS:

• STATE BANK OF INDIA - DIVESTMENT OF 13.19% STAKE IN YES BANK LIMITED

• SBI - DEAL FOR 88.89 BILLION RUPEES

• STATE BANK OF INDIA - TO DIVEST YES BANK SHARES TO SUMITOMO MITSUI BANKING CORPORATION

• STATE BANK OF INDIA - DIVESTMENT TO SMBC AT 21.50 RUPEES PER EQUITY SHARE

Source text: ID:nBSE5VjPDY

Further company coverage: SBI.NS

(([email protected];;))

May 6 (Reuters) - Japan's Sumitomo Mitsui Banking Corp (SMBC) is in advanced discussions to buy a significant stake in India's Yes Bank YESB.NS, the Economic Times reported on Tuesday, citing people aware of the matter.

The move is expected to trigger an open offer for an additional 26% Yes Bank, the report added.

(Reporting by Ashish Chandra in Bengaluru)

(([email protected]; +91 7982114624;))

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Shritama Bose

MUMBAI, April 30 (Reuters Breakingviews) - Casualties are piling up in India's war for bank deposits. The CEO of $8 billion IndusInd Bank INBK.NS stepped down on Tuesday after accounting and lending woes nixed almost half its market value. The shambles is the most high-profile fallout of the banking industry's intense fight for low-cost funds in the country that has wrong-footed executives, shareholders and watchdogs.

Sumant Kathpalia is trying to distance himself from the mess caused on his watch, which includes rising losses on microfinance loans. He is resigning, he said, to take "moral responsibility" for a derivatives lapse that shaved 2.27% off the bank's net worth when it came to light a month ago. His deputy also stepped down on Monday.

The Reserve Bank of India had insisted on the exits, Reuters reported. But the regulator was initially intending for the lender to find replacements first, which is why it approved a one-year extension to Kathpalia's tenure just last month.

The saga bears the markers of perverse incentives. At the heart of the controversy is IndusInd's long-term foreign currency deposits, which it converted to rupees to fund loan growth without fully accounting for mark-to-market losses. The practice, which stretched back at least six years, effectively inflated profits.

The RBI ushered in new accounting rules for internal derivatives trades in April 2024. Nonetheless, repeated instances of governance crises and RBI action at private lenders from Yes Bank YESB.NS to RBL Bank RATB.NS point to the limits of regulatory effectiveness in an environment of fierce competition.

India's 33 banks are locked in a battle for low-cost deposits. Private lenders, the product of India's 1990s liberalisation, have to compete with state-owned peers which are generally regarded as safer.

There's a newer rival, too: Indians' blooming hopes of making more money by putting their cash into stocks and mutual funds. Bank deposits accounted for 44% of overall household financial assets in March 2024, down from 56% in 2020. The drop, coupled with steady loan growth, has driven banks to increasingly tap short-term debt and attracted health warnings from the RBI.

Management overhauls can hold out hope of a fresh start. But the war for deposits may yet claim more casualties.

Follow @ShritamaBose on X

CONTEXT NEWS

IndusInd Bank on April 29 said its Managing Director & CEO Sumant Kathpalia had stepped down from his role. Kathpalia claimed "moral responsibility" in his resignation letter for an accounting lapse that shaved 2.27% off the bank's net worth.

With the Reserve Bank of India's approval, the lender's board has set up a committee of executives to oversee its operations either for three months from the date of Kathpalia's exit or until a new chief assumes charge, whichever comes first, IndusInd said on April 30.

(Editing by Antony Currie and Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on BOSE/
[email protected]))

April 22 (Reuters) - Yes Bank Ltd YESB.NS:

• DHAVAN SHAH RESIGNS AS COUNTRY HEAD - SME BANKING

Source text: ID:nBSE7Rx3KQ

Further company coverage: YESB.NS

(([email protected];;))

April 21 (Reuters) - India's top private lenders ICICI Bank ICBK.NS and HDFC Bank HDBK.NS rose nearly 2% each to hit record highs on Monday, after their fourth-quarter results inspired confidence in the companies' ability to deliver strong loan growth and maintain healthy asset quality.

Both lenders reported quarterly results above analyst estimates on Saturday, driven by sustained loan growth and improving asset quality.

The two banks are Jefferies' top picks in the sector, with analysts highlighting their ability to expand lending margins while maintaining credit costs.

($1 = 85.1420 Indian rupees)

(Reporting by Kashish Tandon and Ashish Chandra in Bengaluru; Editing by Janane Venkatraman)

(([email protected]; +91 7982114624;))

MUMBAI, April 19 (Reuters) - India's Yes Bank YESB.NS reported a better-than-expected 63% rise in net profit for the January-March quarter on Saturday, helped by falling loan-loss provisions.

The Mumbai-based private lender's standalone net profit rose to 7.38 billion rupees ($86.39 million) for the financial year fourth quarter from 4.52 billion rupees in the same period a year earlier.

That was above analysts' average forecast of 6.4 billion rupees, according to LSEG data.

Yes Bank's provisions and contingencies, or funds kept aside for potential bad loans, fell 32.5% on-year to 3.18 billion rupees.

Its gross non-performing asset ratio, a key gauge of asset quality, was at 1.60% at end of March, unchanged from the end of the previous three months.

Net interest income, the difference between the interest earned on loans and paid to depositors, rose 5.7% to 22.76 billion rupees.

Its other income, including fees, commissions and interest earned traditional interest-based activities, rose 11% to 15.67 billion rupees.

Its loans grew 8.1% on year, while deposits rose 6.8%.

Net interest margin, a key profitability measure, was 2.50%, up from 2.40% a year earlier and in the previous three months.

Analysts expect banks' net interest margins to be under pressure in the coming quarters following the 50-basis-points rate cut by the Reserve Bank of India since February. That is because the pass-through to loan rates happens faster compared to deposits.

Shares of Yes Bank closed 1.2% higher on Thursday ahead of the results.
($1 = 85.4290 Indian rupees)

(Reporting by Siddhi Nayak in Mumbai; Editing by Raju Gopalakrishnan)

(([email protected]; +91 22 6921 7848; X: https://twitter.com/siddhiVnayak))

** Yes Bank YESB.NS down 4.62% to 17.12 rupees after Q4 business update

** YESB set for biggest one day percentage decline in nearly 3 months

** Shares at lowest level since November 2023

** Co's Q4FY25 performance "mixed, with subdued credit growth," says ICICI Direct Research

** Co's Q4FY25 loans grew by 0.7% q/q while deposits grew 2.6% q/q

** "The slow pace of credit growth may limit near-term margin expansion despite improving liability mix"- brokerage

** Including session's decline, YESB shares down ~31% in the last 12 months

(Reporting by Ananta Agarwal in Bengaluru)

(([email protected]))

March 21 (Reuters) - Yes Bank Ltd YESB.NS:

• YES BANK LTD - DISCLOSES RECEIPT FROM SALE OF NPA PORTFOLIO TO JC FLOWER ARC

Source text: ID:nNSE3ngCb8

Further company coverage: YESB.NS

(([email protected];))

Yes Bank Ltd YESB.NS:

• YES BANK LTD - RECEIVES INCOME-TAX DEMAND OF 1.45 BILLION RUPEES

Source text: ID:nBSE6PJFzt

Further company coverage: YESB.NS

March 13 (Reuters) - Yes Bank Ltd YESB.NS:

• YES BANK LTD - UPDATE ON SALE OF NPA PORTFOLIO TO JC FLOWER ARC

• YES BANK LTD - RECEIVES 820 MILLION RUPEES FROM FROM A SINGLE TRUST IN SECURITY RECEIPTS PORTFOLIO

Source text: ID:nBSE9SW5bW

Further company coverage: YESB.NS

(([email protected];;))

Feb 5 (Reuters) - Yes Bank Ltd YESB.NS:

• YES SECURITIES ALLOTS 2,50,85,603 SHARES TO YES BANK

Source text: ID:nBSE5RHyyk

Further company coverage: YESB.NS

(([email protected];;))

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Shritama Bose

MUMBAI, Jan 23 (Reuters Breakingviews) - A small-loan crisis is creeping up on India’s banks. Bad debt inched up at the $146 billion HDFC Bank HDBK.NS and other private lenders in the three months to the end of December, and the central bank recently warned of a deep rot in small loans. The $2 trillion banking system is better prepared for an asset quality crisis than a decade ago, but a stalling economy could batter its defences.

HDFC’s gross bad loan ratio rose six basis points from the end of September to 1.42%. Axis Bank AXBK.NS doubled its provisions and contingencies from the same three-month period in the previous year to account for defaults on unsecured personal loans, and Kotak Mahindra Bank KTKM.NS raised them by 37%.

India’s banks learnt some lessons from the last blowup in 2015-16, when a string of chunky project loans left their balance sheets bleeding. At 16.7%, their capital as a share of risk weighted assets is nearly four percentage points higher than in 2014. The share of the top 100 borrowers in outstanding loans is down to 15% from 18%. Bad loans are at a 12-year low of 2.6%. And the Reserve Bank of India mandates Indian lenders hold a 2.5% buffer above the 9% minimum capital requirement under Basel III norms. It tightened the screws on unsecured loans in November 2023 to curb excessive risk-taking.

Macroeconomic disruption could mess with that. An RBI stress test revealed that in an extreme scenario where GDP growth slows to around 3% and inflation rises to 7.8%, four banks may breach the minimum capital requirement of 9%.

Mid-sized private banks are prone to that risk. In 2020, Yes Bank’s YESB.NS rivals rescued it from near-failure with cash infusions and months later, Singapore's DBS DBSM.SI acquired another capital-starved lender based in southern India. That’s making markets jittery about private lenders like RBL RATB.NS and IndusInd Bank INBK.NS which specialise in microloans of under $500, the segment where the stress is deepest. The finance chief of IndusInd, which reported surging provisions and a profit drop in the September quarter, resigned on Friday.

So far the risk is limited to only a slice of loans -- unsecured loans account for a quarter of total bank credit. To contain it, banks are easing off on new lending. That in turn could slow GDP growth further. It’s a feedback loop India can ill afford.

Follow @ShritamaBose on X

CONTEXT NEWS

HDFC Bank on Jan. 22 reported consolidated net profit of $2.04 billion for the three months to Dec. 31, 2% higher than in the same period a year earlier. The bank’s gross non-performing asset ratio rose six basis points from the end of September to 1.42%.

IndusInd Bank on Jan. 18 said Chief Financial Officer Gobind Jain resigned from the position on the previous day to pursue other professional opportunities.

(Editing by Antony Currie and Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on BOSE/
[email protected]))

Jan 3 (Reuters) - Yes Bank Ltd YESB.NS:

• YES BANK LTD - DEC-END LOANS & ADVANCES UP 12.6% Y/Y

• YES BANK - DEPOSITS UP 14.6% Y/Y AS ON DEC END

Source text: ID:nBSE2sW6hG

Further company coverage: YESB.NS

(([email protected];))

Dec 6 (Reuters) - Nureca Ltd NURE.NS:

• NURECA LTD - ACQUIRED SHARES OF YES BANK FOR 9.7 MILLION RUPEES

Source text: ID:nBSE2mqXS6

Further company coverage: NURE.NS

(([email protected];))

** Shares of Yes Bank YESB.NS climb 8.2% to 21 rupees

** Co's Q2 profit jumps on strong lending income, lower provisions

** Trading vols 109.4 mln vs 30-day avg of 77.3 mln

** Day's jump trims YTD losses to 2.4%

(Reporting by Hritam Mukherjee in Bengaluru)

(([email protected];))

MUMBAI, Oct 26 (Reuters) - India's Yes Bank YESB.NS reported a bigger-than-expected rise in net profit for the July-September quarter on Saturday, helped by an increase in core lending income and a drop in provisions.

The Mumbai-based private lender's standalone net profit more than doubled to 5.53 billion rupees ($65.8 million) for the financial second quarter from 2.25 billion rupees in the same period a year earlier.

That exceeded analysts' average forecast of 5.46 billion rupees, according to LSEG data.

Yes Bank's loans grew 12.4% on year, while deposits rose 18.3%.

Net interest income, the difference between the interest earned on loans and paid to depositors, rose 14.3% to 22 billion rupees.

Indian banks have consistently seen healthy demand for loans as economic growth has been strong and urban consumption demand is high. Banks, however, are trying to raise deposits to fund the credit growth that has kept margins under pressure.

Yes Bank's net interest margin, a key profitability measure, was 2.4%, up from 2.30% a year earlier and flat from the previous three months.

Provisions and contingencies, or funds kept aside for potential bad loans, fell nearly 41% to 2.97 billion rupees.

This was after the bank reversed provisions worth 1.03 million rupees previously kept aside for its exposure to Alternative Investment Funds, it said.

Yes Bank's gross non-performing asset ratio, a key gauge of asset quality, improved to 1.6% at end of September, 1.70% from the end of the previous three months.

Shares of Yes Bank closed 2.6% lower on Friday ahead of the results.

($1 = 84.0950 Indian rupees)

(Reporting by Siddhi Nayak; Editing by William Mallard)

(([email protected]; +91 22 6921 7848; Reuters Messaging: X: https://twitter.com/siddhiVnayak))

Oct 3 (Reuters) - Yes Bank Ltd YESB.NS:

• YES BANK - SEPT LOANS & ADVANCES UP 13.1% Y/Y

• YES BANK - PROVISIONAL DEPOSITS UP 18.3% Y/Y AS ON 30-SEP-24

Source text for Eikon: [ID:]

Further company coverage: YESB.NS

(([email protected];))

By Siddhi Nayak

MUMBAI, Aug 28 (Reuters) - Talks to sell majority stakes in two Indian banks have attracted interest from foreign peers in Japan and the Middle East betting on a fast-growing economy, but tighter regulations and valuation concerns could curb their appetite, analysts and sources say.

The rare opportunity for foreign banks to take controlling stakes in a market dominated by state-owned banks comes as existing investors in Yes Bank YESB.NS and IDBI Bank IDBI.NS look to divest their holdings.

Banking sector deals in India, especially those involving foreign entities, are rare. A full takeover of troubled Indian lender Lakshmi Vilas Bank by Singapore-based DBS Group in a regulatory-driven transaction in 2020 was the last major deal.

The top shareholders are looking to exit from the two banks about four years after they were roped in by the regulator and the government to help them recover from sharply worsening asset quality due to rampant lending that threatened their stability.

Private sector lender Yes Bank, in which shareholders are looking to sell a 51% stake, has drawn interest from Japan's Sumitomo Mitsui Banking Corp (SMBC) and Emirates NBD, Reuters has reported.

IDBI Bank, in which the Indian government and the Life Insurance Corporation are collectively selling a 60.72% stake, has seen Emirates, Canada's Fairfax Group, as well as local rival Kotak Mahindra Bank KTKM.NS express interest.

The foreign interest in the two banks comes as the Indian economy is forecast to grow at 7.2% this year, making it one of the world's fastest-growing major economies.

Demand for bank credit, which includes corporate loans and mortgages, is growing at twice the expected economic growth pace and gross bad loans in the domestic banking sector are currently at multi-year lows of 2.8% of total assets.

Similar to other major markets, inbound banking sector deals are tightly scrutinized in India. Given the sector's importance and linkages with the broader economy, New Delhi is expected to field interest from bidders in countries it has good political ties with, analysts said.

"India's growth story is promising, and corporates are looking to expand their businesses," said Ashvin Parekh, managing director of Ashvin Parekh Advisory Services, which provides services to investors in banks.

"That is enticing these (foreign) players," Parekh said.

Despite those attractions, stricter rules related to capital requirements and ownership restrictions, and state domination with government-backed banks accounting for nearly 52% of the bank credit have weighed on foreign banks' operations in India.

Regulations in India also require that the largest shareholder of a local bank, termed as 'promoter' under Indian regulations, must their reduce shareholding to 26% over a 15-year period.

Foreign lenders, including HSBC HSBA.L and Standard Chartered STAN.L, accounted for only 3.4% of the banking sector credit as of March 2024, less than half of the 8.4% share they held in March 2000, according to the central bank data.

'FIERCELY COMPETITIVE'

SMBC has been in advanced talks with Yes Bank and its lead investor State Bank of India SBI.NS over the past few weeks for the majority stake acquisition, said three sources with knowledge of the talks.

The core banking unit of Japan's No.2 banking group Sumitomo Mitsui Financial Group 8316.T has sought Yes Bank operational data and its executives have met with the officials at the Reserve Bank of India (RBI), the central bank, said the sources.

Yes Bank was rescued by a consortium of local banks in 2020 after bad loans soared.

Emirates NBD is also in talks for a stake in Yes Bank. It is also participating in the stake sale process for IDBI Bank, said one of the three sources above and a fifth person familiar with the talks in India.

The government plans to invite financial bids for IDBI Bank by the end of this financial year, divestment secretary Tuhin Kanta Pandey told Reuters last month. IDBI Bank was rescued by the government in 2019.

RBI has approved Fairfax Financial, Emirates NBD, and Kotak Mahindra as potential bidders, Reuters reported earlier this month.

The sources declined to be identified as the talks were private.

Yes Bank and Kotak Mahindra did not comment on the deal talks. SMBC declined to comment. The RBI, IDBI Bank, Emirates NBD, and Fairfax did not respond to Reuters emails seeking comment.

HIGH VALUATIONS?

However, some potential bidders are expected to baulk at the high valuations of the targets, analysts say, clouding the prospects of the deals being sealed. It was not immediately clear known how soon the two deals will be finalised.

Yes Bank is currently valued at about $10 billion, and trading at 1.58 times the 12-month forward price-to-book value, according to LSEG, compared to the sector median price-to-book value of 1.45 times.

IDBI Bank trades at a 12-month trailing price-to-book value of 1.97 times, LSEG data shows.

The "legacy" of asset quality issues at the two banks would also feed into the cost of acquisition for the prospective foreign buyers, said independent research analyst Hemindra Hazari.

"The real problem, however, is that the Indian banking system is fiercely competitive," said Parekh. "A foreign player would need a significant amount of branch network, distribution and franchise to be able to sustain in the banking system."

(Reporting by Siddhi Nayak; additional reporting by Swati Bhat and Ira Dugal in Mumbai, Kane Wu in Hong Kong and Miho Uranaka in Tokyo; Editing by Sumeet Chatterjee and Kim Coghill)

(([email protected]; +91 22 6921 7848; Reuters Messaging: X: https://twitter.com/siddhiVnayak))

BENGALURU, Aug 27 (Reuters) - Indian private lender Yes Bank YESB.NS on Tuesday relieved Amit Sureka from his duties as the country head of its financial markets division.

The lender, in a statement, did not mention the reason for Sureka's removal.

Sureka, based in the lender's Mumbai branch, had joined Yes Bank in 2005.

Yes Bank, where Indian lenders collectively own a 34% stake and the State Bank of India (SBI) is the largest shareholder with a 24% interest, has been seeking a new promoter.

SBI aims to cut its stake in Yes Bank by March-end to sell its 24% stake, sources had told Reuters earlier this month.

The sale could allow stakeholders like SBI, Life Insurance Corporation of India LIFI.NS, HDFC Bank HDBK.NS and ICICI Bank ICBK.NS to exit, after they had stepped in to save the lender from collapse in 2020.

(Reporting by Ashna Teresa Britto in Bengaluru; Editing by Mrigank Dhaniwala)

(([email protected];))

Aug 26 (Reuters) - Yes Bank Ltd YESB.NS:

• YES BANK- NAMES SUMIT BALI AS COUNTRY HEAD - RETAIL ASSETS AND DEBT MANAGEMENT

Further company coverage: YESB.NS

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By Ashwin Manikandan and Siddhi Nayak

BENGALURU/MUMBAI, Aug 16 (Reuters) - Indian private lender Yes Bank YESB.NS has appointed veteran banker Sumit Bali to head its retail business and collections, three sources directly familiar with the matter said on Friday.

Bali will join Yes Bank from Aug. 26 and report to executive director Rajan Pental, one of the sources said.

The banker, who headed retail lending for India's third largest private lender Axis Bank AXBK.NS, had quit in June. Friday is his last day at Axis Bank.

The sources did not wish to be identified as they are not allowed to speak with the media.

Yes Bank did not immediately respond to a Reuters email seeking comment.

Bali has almost three decades of experience in retail banking, and worked at Kotak Mahindra Bank KTKM.NS before joining Axis Bank, where he worked in multiple roles.

At Yes Bank, his role will be crucial "as the bank is now entering its transformational phase in its hunt to find a new promoter", the second source said.

Yes Bank's loan book stood at approximately 2.30 trillion rupees ($27.39 billion) as on June 30, of which 60% was made up of retail and small and medium enterprise loans.

Japanese lender Sumitomo Mitsui Banking Corp and Dubai-based Emirates are in advanced talks to acquire a majority stake in Yes Bank, Reuters reported on Tuesday.

($1 = 83.9575 Indian rupees)

(Reporting by Siddhi Nayak in Mumbai and Ashwin Manikandan in Bengaluru; Editing by Mrigank Dhaniwala)

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