Citi cuts Yes Bank target after Supreme Court revives AT-1 bond liabilities

what happened

The Supreme Court of India upheld the Bombay High Court's decision to quash the write-off of Rs 8,415 crore of additional tier-1 bonds. The write-down was carried out during Yes Bank's restructuring in March 2020. The court held that the bank's administrator lacked the authority to do so. The bonds remain outstanding, which could expose the lender to repayment and interest obligations. According to Moneycontrol, Yes Bank shares fell 14.53 percent on October 15.

Citi kept its Sell rating and cut its target price to Rs 17.50 from Rs 22. The new level implies a further decline of 3.4 percent from Thursday's close of Rs 18.12. Citi estimates that the CET-1 ratio could fall by about 250 basis points, to roughly 11.5 percent, before accounting for coupon payments. The brokerage also sees book value eroding by 13 to 14 percent and warns the bank may need to raise additional capital.

Yes Bank said it was examining the judgment and its implications and would make further disclosures as required. The uncertainty also touches its largest shareholder, Japan's SMBC, whose total investment is estimated at around Rs 17,000 crore.

why it matters

For markets, the case signals capital risk at Indian private lenders. Yes Bank shares have lost 15.7 percent so far in 2026, while the Nifty 50 has fallen 12 percent. A weaker CET-1 ratio and possible share issuance could limit the bank's lending growth and weigh on how investors value its stock.

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