Yes Bank Faces 250-Bps Impact After Supreme Court AT-1 Ruling
Yes Bank headquarters in Mumbai.
Key Highlights
Supreme Court upholds quashing of Yes Bank’s AT-1 bond write-off, creating a 250-basis point impact on its core capital ratio. Read the full financial analysis.
The Supreme Court of India upheld the quashing of Yes Bank’s ₹8,415 crore Additional Tier-1 bond write-off, concluding that the bank’s administrator lacked the authority to proceed after the government omitted the clause from the final reconstruction scheme.
Key Capital and Market Figures
The legal dispute stems from bonds issued across two separate years under administrator decisions executed on March 14, 2020. The ruling has immediate implications for the lender’s financial disclosures and ongoing credit evaluations.
Impact Breakdown
The ruling carries specific financial metrics for the lender and its regulatory standing:
- 250-basis point impact on the Common Equity Tier 1 capital ratio.
- ₹3,000 crore issued in December 2016.
- ₹5,415 crore issued in October 2017.
- 0.6 percent to which the CET1 ratio previously plummeted.
Yes Bank maintains that it remains well-capitalized despite the anticipated strain on capital ratios and potential earnings impact resulting from the court order. S&P Global Ratings stated that the Supreme Court’s ruling is unlikely to affect Yes Bank’s credit ratings.
Regulatory Scrutiny and Outlook
The bench was critical of the Reserve Bank of India, describing it as a mere bystander while the bank’s capital metrics deteriorated. The court also expressed concern over the sale of these high-risk instruments to retail investors rather than institutional players.