Yes Bank Shares Slide Over 8% After Supreme Court Rules Against AT-1 Bond Write-Off

what happened

Shares of Mumbai-based private lender Yes Bank Ltd. fell more than 8% on Thursday, October 15, after the Supreme Court ruled against the bank's 2020 write-off of AT-1 bonds worth ₹8,400 crore. The write-off was part of the bank's rescue and restructuring. The Supreme Court upheld the Bombay High Court's decision that had quashed the write-off.

The court said Yes Bank must honor the bonds at coupon rates of 9.5% and 9%. It also found that the administrator could not have written off the bonds, and that the move was inconsistent with the master circular. The administrator had approved the write-off in 2020, saying it was necessary for the bank's survival. Yes Bank raised ₹8,415 crore through these bonds in 2016 and 2017. Bondholders represented by Axis Trustee Services had challenged the write-off, arguing that only the RBI could approve such a step.

According to CNBC-TV18, AT-1 bonds are hybrid capital instruments under Basel-III designed to absorb losses when a bank reaches non-viability. Bondholders had lost their entire principal, and over 97% of them were individual bank customers. At the time of reporting, Yes Bank shares were trading 8.1% lower at ₹19.85 and were negative year to date. The story is breaking and will be updated.

why it matters

The ruling matters for markets because it raises questions about the bank's capital position and about how write-offs during rescues are treated. Investors will be watching for further regulatory comment and updates on the case.

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