The apex court upheld a Bombay High Court ruling that reversed the March 2020 write-off of ₹8,415 crore worth of AT-1 bonds. Yes Bank disclosed that while its Common Equity Tier 1 ratio could drop by around 250 basis points, its overall Tier 1 ratio should hold at 14% on a pro forma basis. The bank plans to seek a legal review and is unlikely to disburse coupons due this year on the reinstated debt. Retail bondholders have pressed Axis Trustee Services to step in following missed payments on October 18.
Key points
The legal reversal of the ₹8,415 crore bond write-off directly threatens to weaken the ba…: The legal reversal of the ₹8,415 crore bond write-off directly threatens to weaken the bank's core capital reserves.
Coupon payments on the AT-1 debt remain halted because bonds must first be formally resto…: Coupon payments on the AT-1 debt remain halted because bonds must first be formally restored to the balance sheet.
Yes Bank intends to file a review petition against the apex court's ruling while relying…: Yes Bank intends to file a review petition against the apex court's ruling while relying on discretionary clauses to skip near-term payouts.
Sources checked by our analysis pipeline: 1
The sell-off in Yes Bank deepened further in Thursday’s trade on October 29, with the stock falling another 1.15% to ₹15.43 apiece, marking its lowest level since April 2023. The decline has widened its October losses to 26%, putting the stock on track for its second consecutive monthly decline.
Yes Bank shares have come under pressure following the Supreme Court’s decision to uphold the Bombay High Court judgment against the write-off of ₹8,415 crore worth of Additional Tier-1 (AT-1) bonds, undertaken in March 2020 as part of the lender’s reconstruction.
The verdict marks a significant victory for bondholders whose investments were cancelled during the bank’s rescue six years ago.
On October 15, the apex court dismissed appeals filed by Yes Bank, the Reserve Bank of India (RBI), and the Union government, upholding the Bombay High Court’s January 20, 2023, judgment on the matter.
The ruling has raised concerns about the potential impact on the bank’s capital position and the future of the bonds, which were written off during its 2020 rescue.
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