According to reports, State Bank of India (SBI) is considering selling YES Bank shares worth Rs 5,000-7,000 crore through a block deal. This move by SBI could potentially help avoid equity dilution if the shares are sold in the open market for capital requirements.
Shares of YES Bank Ltd were trading relatively flat in an otherwise weak trading session on Thursday. However, brokers are reportedly urging SBI to sell shares in the private lender via block deals. The stake sale is expected to take place by March 31, as per the report.
As of the end of the December quarter, SBI owned a 26.13% stake in YES Bank, which amounted to 7,51,66,66,000 shares. This stake was valued at Rs 22,900 crore as of Thursday’s trade. The monetization of this stake is expected to benefit SBI, especially since the state-run PSB made pension-related provisioning in the December quarter.
HDFC Bank, which recently received approval from the RBI to increase its stake in YES Bank up to 9.5%, currently holds a 3% stake in the private lender. The additional 6.5% stake that HDFC Bank intends to acquire is valued at Rs 5,747.20 crore, based on Thursday’s trading price.
At 11:13 am, shares of YES Bank were trading at Rs 29.74 on BSE, down 0.30%. Meanwhile, SBI’s shares were trading above Rs 700, up 3.71% at Rs 700.55. The stock had reached a high of Rs 718.80 earlier in the day. Other banks such as ICICI Bank, Axis Bank, Kotak Mahindra Bank, and IDFC First Bank also hold stakes in YES Bank.
According to CNBC Awaaz, the sale of YES Bank shares by SBI may not attract any taxes, and there is no lock-in period for SBI regarding the sale. The SBI board is expected to discuss the sale of shares in YES Bank soon, with the proceeds from the stake sale intended to boost the bank’s balance sheet liquidity.
SBI has reportedly met with several asset management companies, including Goldman Sachs AM, Nomura AM SG, Sentosa, Prudence, and PG Investment Management, regarding the potential sale of YES Bank shares.
In conclusion, SBI’s consideration of selling YES Bank shares worth Rs 5,000-7,000 crore through a block deal could have significant implications for both banks. This move could potentially help SBI avoid equity dilution and strengthen its balance sheet liquidity, while also allowing YES Bank to attract new investors and stabilize its financial position.
