From The Economic Times · Saloni Shukla · · 1m
SC Ruling Hits Yes Bank's Capital Buffer
Supreme Court's AT1 bond reversal threatens Yes Bank's core capital by 230-300 basis points.
In brief
Supreme Court's AT1 bond reversal threatens Yes Bank's core capital by 230-300 basis points. Yes Bank's CET1 ratio could drop to 11-11.5% after SC ruling reverses $841.5cr AT1 bond write-down. Originally reported by The Economic Times.
SC Ruling Reverses AT1 Write-Down
The Supreme Court overturned the March 2020 write-down of ₹8,415 crore AT-1 bonds.
“The apex court on Thursday dismissed appeals filed by Yes Bank, the Reserve Bank of India and the government against the Bombay High Court judgment that had set aside the March 2020 write-down.”
CET1 Capital Buffer at Risk
Yes Bank faces a 230-300 basis point hit to its CET1 ratio, dropping from 14% to 11-11.5%.
AT1 Bonds Impact
Two AT-1 issuances totaling ₹8,415 crore could reduce Yes Bank's equity by 16.5% under principal-only scenarios.
Accounting Treatment Uncertainty
The court does not require immediate cash repayment of ₹8,415 crore or past coupon payments.
Capital Ratio Implications
Yes Bank's CET1 ratio places it at the lower end of core capital ratios among major Indian banks.
Next Steps for Yes Bank
The bank is examining the final order copy of the judgment and its implications for capital planning.
The one thing
Yes Bank's CET1 ratio could drop to 11-11.5% after SC ruling reverses $841.5cr AT1 bond write-down.
