Yes Bank said its Common Equity Tier 1 (CET1) capital ratio could decline by around 250 basis points, a day after the Supreme Court upheld the Bombay High Court judgment against the write-down of Additional Tier-1 (AT-1) bonds worth ₹8,415 crore, undertaken in March 2020 as part of the bank's reconstruction.
The bank's overall Tier 1 capital ratio, however, is expected to remain unchanged at 14% on a pro forma basis, the bank said in its exchange filing on Friday. Capital ratios measure a bank's financial strength by comparing its capital with its risk-weighted assets, indicating its ability to withstand losses.
Additional Tier-1 (AT-1) bonds are perpetual instruments issued by banks to increase their capital base. They are riskier than traditional bonds and typically offer higher interest rates. The RBI can require their write-down or cancellation under specified circumstances if a bank is in financial trouble.
The Supreme Court on Thursday dismissed appeals filed by Yes Bank, the Reserve Bank of India (RBI), and the Union government, upholding the Bombay High Court's January 20, 2023, judgment on the matter.
The bank is examining the judgment in detail, including evaluating all available legal options and suitable actions or steps going forward, Yes Bank said in a regulatory filing.