YES Bank book value may fall up to 26% after SC ruling on AT-1 bonds
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AgenciesThe bank's shares have fallen by 17% in two trading sessions following the Supreme Court's verdict.
The bank's shares have fallen by 17% in two trading sessions following the Supreme Court's verdict that upheld the January 2023 Bombay HC ruling, declaring Yes Bank's ₹8,415 crore write-off of Additional Tier-1 bonds in March 2020 illegal.
The recent Supreme Court ruling on AT-1 bonds poses a serious risk to Yes Bank’s financial stability. A potential payout near ₹8,415 crore could lead to a significant decline in its book value per share. Moreover, this may weaken the bank's CET1 ratio, limiting its growth potential and ability to absorb losses, which is already reflected in its plummeting share price since the announcement.
ET BureauIf the bank restores the ₹8,415 crore principal and it is not required to pay coupon arrears, book value per share may decline to ₹13.9 from ₹16.6, Yuvraj Choudhary, research analyst at Anand Rathi Institutional Equities told ET. The bank's net worth could fall to ₹43,923 crore from ₹52,338 crore, while its common equity tier-1 (CET1) ratio could decline by 250 basis points to 11.5% from around 14%.