MUMBAI: Yes Bank has told investors that Supreme Court’s order to restore Rs 8,415 crore of additional tier-1 (AT1) bonds written off during its March 2020 restructuring would not constrain growth, citing deferred tax assets (DTAs) and other capital buffers to absorb the impact. Rating agencies said the ruling would not materially affect the bank’s credit profile, although it has implications for its capital structure.Crisil Ratings said Yes Bank could absorb the AT1 bond ruling’s impact through internal accruals and fresh capital, with support expected from its largest shareholder, Sumitomo Mitsui Banking Corporation. While the ruling is not expected to materially affect its credit profile, coupon payments for the intervening 5.5 years remain uncertain. In another case, Dhanlaxmi Bank was earlier allowed to defer coupons on Basel II-compliant tier-II bonds.Analysts said reversing the AT1 write-down, originally credited to the profit and loss account, could leave the bank without the profits needed to pay coupons under the conditions of the AT1 bonds. As a result, the bank’s maximum liability was likely to be Rs 8,415 crore.In an earnings call, managing director and CEO Vinay Tonse said the bank was examining the judgment and its options. “We respect the judgment and are examining it carefully, including the options available to the bank,” he said.CFO Niranjan Banodkar said reinstating the AT1 principal would reduce the common equity tier-I (CET-1) ratio by around 240 basis points on a pro forma basis, based on an indicative assessment as of Sept 30, 2026, including profits. The overall tier-I capital ratio would remain around 13.7%, while the pro forma CET-1 ratio would be 11.4%. Banodkar said the bank was reviewing the judgment, legal options and capital plans.
