India's Supreme Court on Thursday set aside Yes Bank's 2020 write-off of 84 billion rupees of additional tier 1 bonds and threw out the bank's appeals. According to the court, the administrator installed as part of the government backed rescue lacked the power to wipe out the securities. Since the ruling, the stock has dropped more than 17%.
Yes Bank said that if it had reflected the judgment's impact in its books, fiscal second quarter results would have swung to a 52.17 billion rupee loss, or $549 million. Instead, it posted a 10.8 billion rupee profit for July through September.
On an indicative and unaudited basis, the bank said restating the AT1 principal turns the half-year into a 41.46 billion rupee loss versus a 21.51 billion rupee profit for the period, and takes second quarter return on assets to negative 4.3%. CEO Vinay Tonse said the bank is reviewing the Supreme Court order on the additional tier 1 securities "in detail and will take appropriate steps in accordance with the applicable legal and regulatory requirements."
When headlines change quickly, staying clear matters, so sign up for the free Market Briefs to stay informed
Kotak Mahindra Asset Management Co. and Nippon Life India Asset Management Ltd. have paused fresh inflows into debt and retirement schemes that hold Yes Bank's AT1s, expecting the bonds' values to rise after the judgment. The bottom line: equity and AT1 pricing now hinge on the bank's next legal and regulatory steps, a swing factor to watch if your portfolio touches Indian financials or credit funds.
If you want a calm short morning rundown, subscribe to our free Market Briefs newsletter for concise context
