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Yes Bank Faces Bond Crisis: 3-Day Ultimatum Issued
30 Oct
Summary
- Yes Bank has three days to reinstate ₹8,415 crore of AT1 bonds.
- Supreme Court ruled bank administrator lacked authority to write down bonds.
- Reinstating bonds could cut Yes Bank's CET1 ratio by 240 basis points.
Axis Trustee Services has issued a three-day deadline for Yes Bank to reinstate ₹8,415 crore of additional tier-1 (AT1) bonds that were written off in March 2020. This action is a direct consequence of a Supreme Court ruling on October 15, which dismissed appeals by Yes Bank, RBI, and the Union government. The court upheld a Bombay High Court decision stating the bank's administrator had no authority to write down these bonds during the 2020 rescue.
The trustee has formally requested Yes Bank's management to restore the bonds in its register of holders and reverse write-off entries with NSDL and CDSL. Additionally, they seek enabling of trading resumption on BSE and NSE. The bank's management indicated on an earnings call that reinstating the principal would reduce its CET1 ratio by about 240 basis points, potentially lowering it to around 11.4% from 13.7%.
Further complicating matters, the trustee is seeking clarification on three unpaid coupon payments, including those due on October 19 and December 23. Yes Bank stated on October 24 that it is still evaluating the judgment's implications and has not yet decided on paying or cancelling these coupons. The trustee has also conveyed its intention to examine legal options if Yes Bank delays the judgment's implementation or defaults on coupon payments, with a bondholders' meeting scheduled for November 16.
