Yes Bank expects restoring AT1 bonds to cut core capital by 250 basis points

what happened

Yes Bank told investors on Friday that bringing back AT1 notes it had earlier written off would lower its core equity buffer by roughly 250 basis points. The previous day, India's highest court overturned the write-down of 84 billion rupees ($883.7 million) in such bonds, carried out during the bank's 2020 bailout. The verdict is a setback for both the lender and the regulators who had backed the decision.

According to the bank, its tier-1 capital ratio would stay at 14% on a pro forma basis. Yes Bank is still assessing the ruling and its consequences, and says it will publish more details "in due course."

S&P Global Ratings does not expect the decision to change Yes Bank's ratings, although it expects the ruling to weigh on future earnings. In S&P's view the bank can absorb the hit: its common equity tier-1 ratio stood at 13.87% at end-March 2026, well above the 5.5% minimum. The agency projects its risk-adjusted capital ratio at 8% to 8.5% through March 2028, down from 9% in March 2026. It is unclear whether the bank will appeal.

why it matters

According to S&P, the restored bonds largely offset the write-off in common equity terms, so the net effect will depend on the bank's disclosures and any appeal. Holders of Indian bank debt may watch how the court's procedural findings shape the accounting treatment of similar AT1 instruments.

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instruments