MUMBAI — Private lender Yes Bank has estimated the financial impact of a top court ruling regarding its Additional Tier-1 (AT1) bonds at Rs 5,217 crore, according to reporting by Accredited Wire Reports.
The calculation follows a decision by India's top court to void the bank's previous write-off of $880 million in AT1 bonds. The instruments had been written down during an earlier restructuring of the lender, which counts Japan's Sumitomo among its prominent backers.
Court Decision and Capital Impact
The judicial decision invalidating the bond cancellation directly challenges the terms under which the lender had resolved its previous capital shortfalls. Rating agency Crisil noted that Yes Bank's Common Equity Tier-1 (CET1) ratio could decline to 10% if the bank is required to service and pay past AT1 bond coupons.
The regulatory and legal developments around the instruments have generated broader scrutiny within the financial sector over the treatment and structural risks associated with high-yield perpetual debt issued by commercial lenders.
Financial Performance and Operational Standing
The verdict comes even as Yes Bank posted an improvement in its operational earnings. The bank reported a 63% increase in its second-quarter net profit, which reached ₹1,084 crore.
Despite the positive quarterly net income, the potential payout obligations stemming from the Rs 5,217 crore court verdict remain a focal point for market observers and credit rating agencies assessing the lender's capital adequacy buffers going forward.
