Yes Bank flags 250-bps impact on core capital ratio after Supreme Court upholds AT-1 bond write-off ruling

Yes Bank said its Common Equity Tier 1 (CET1) capital ratio could decline by around 250 basis points, a day after the Supreme Court upheld the Bombay High Court judgment against the write-down of Additional Tier-1 (AT-1) bonds worth ₹8,415 crore, undertaken in March 2020 as part of the bank's reconstruction.The bank's overall Tier 1 capital ratio, however, is expected to remain unchanged at 14% on a pro forma basis, the bank said in its exchange filing on Friday.

Capital ratios measure a bank's financial strength by comparing its capital with its risk-weighted assets, indicating its ability to withstand losses.Additional Tier-1 (AT-1) bonds are perpetual instruments issued by banks to increase their capital base. They are riskier than traditional bonds and typically offer higher interest rates. The RBI can require their write-down or cancellation under specified circumstances if a bank is in financial trouble.The Supreme Court on Thursday 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 bank is examining the judgment in detail, including evaluating all available legal options and suitable actions or steps going forward, Yes Bank said in a regulatory filing.The bank also said it has access to various capital-management levers and retains the flexibility to undertake additional capital actions, as considered appropriate, to pursue its growth objectives.The bank remains focused on strengthening its franchise and providing consistent service and support to customers across their banking requirements, it added.Separately, S&P Global Ratings said it does not expect the Supreme Court ruling against Yes Bank to affect its ratings, although it could weigh on future earnings, Reuters reported.Yes Bank's regulatory capital is adequate, with its Common Equity Tier 1 ratio of 13.87% as of the end of March 2026 able to absorb the expected 250-basis-point hit while remaining well above the minimum requirement of 5.5%, S&P said.The ratings agency said the lender's credit profile could withstand the ruling, which addresses procedural lapses in the write-down under the 2020 rescue.

S&P expects Yes Bank to remain adequately capitalised, with its risk-adjusted capital ratio projected to remain between 8% and 8.5% through March 2028, compared with 9% in March 2026, according to the report.Share price crashFollowing the news, investors grew concerned about the bank's financial health, resulting in a 14% crash in Thursday's trade. The sell-off extended into Friday's session, with the stock falling another 3.42%.The losses have widened the bank's October losses to 17% so far, while the stock has declined 19% in 2026.(With agency inputs)Disclaimer: We advise investors to check with certified experts before making any investment decisions.