HSBC Financial Services Middle East has picked up a 4.99 per cent stake in Yes Bank in the secondary market. The global investment arm of HSBC has been investing in the bank since January. "Like Rabo Bank investments, HSBC Financial Services Middle East's investment in Yes Bank should be viewed as a financial investment. There is no arrangement for any cooperation with HSBC at this stage,'' said Yes Bank managing director (MD) and chief executive officer (CEO) Rana Kapoor.
Rabo Bank holds around 18 per cent in Yes Bank.
During a recent interaction with Business Standard, HSBC group general manager and India head Naina Lal Kidwai had said, "HSBC has global investment arms which keep evaluating investment options. They invest in good portfolios."
While HSBC refused comment on Tuesday, the strategic investment in Yes Bank has set the market abuzz with rumours. This is the second strategic investment made by the HSBC group in a bank after its investment in Axis Bank (earlier called UTI Bank). The group now holds a 4.96 per cent stake in Axis Bank.
HSBC had originally picked up a little over 14 per cent stake in UTI Bank and had to pare it to 4.99 per cent at the behest of the Reserve Bank of India (RBI).
In the recent past, Citigroup had picked up around 12 per cent in HDFC. Analyst saw Citi's acquisition, and its indirect stake in HDFC Bank, as a strategic move to get ready to buy an Indian bank once the RBI eases the rules for foreign banks to enter India.
On the news of the HSBC investment, Yes Bank shares rose 20.53 per cent on the Bombay Stock Exchange to close at Rs 172.05.
"HSBC also seems to be gearing up for 2009. The bank wants to expand its retail reach by setting up an NBFC. But regulatory approval is pending. Additionally, the branch expansion restrictions on foreign banks may have also forced the group to look at other options in India,'' said a banking sector analyst at a brokerage.
At present, HSBC has about 47 branches and around 170 ATMs. Yes Bank has 60 operational branches, 75 ATMs and has received RBI approval to set up additional 57 branches and 125 ATMs.
According to the RBI norms, foreign banks are allowed to buy up to 5 per cent stake in a bank. Annually, all foreign banks operating in India receive permission to open around 12 to 14 branches.
According to the RBI road map, the banking sector may be further opened up to foreign competition after the end of March 2009, giving foreign banks more freedom with respect to acquisitions. At present, they can acquire weak banks that are under restructuring. However, the RBI has not made public any such list.
