Stock market today: Yes Bank share price witnessed sharp selling during the Closing Bell session. In a span of a few minutes, Yes Bank shares crashed from ₹21.25 apiece on the NSE to ₹19.08. Yes Bank shares came under selling pressure after the Supreme Court quashed the ₹8,415 crore AT-1 bond write-off.
In a setback to private lender , the Supreme Court on Thursday upheld the Bombay High Court’s judgment quashing the bank’s ₹8,415 crore AT-1 bond write-off.
Yes Bank share price crash | Supreme Court’s ruling impact
Speaking on the reason for the sharp correction in Yes Bank shares, Anuj Gupta, a SEBI-registered market expert, said, “Yes Bank shares are nosediving after the Supreme Court’s ruling on its AT-1 bond write-off. The Apex Court of India has quashed the ₹8,415 crore AT-1 bond write-off, which is expected to hit the private lender dearly, as Yes Bank had written down its AT-1 bonds to zero during its 2020 rescue.”
Anuj Gupta said that the Supreme Court’s ruling to uphold the Bombay High Court’s decision on the ₹8,415 crore AT-1 bond write-off would require Yes Bank to recognise obligations associated with the bonds, including coupon payments at the prescribed rates of 9.5% and 9%.”
Impact on the profitability of Yes Bank
Echoing with Anuj Gupta’s views, Mahesh M Ojha, VP — Research and Business Development at KC Securities, said, “The Supreme Court’s ruling on Yes Bank’s AT-1 bond write-off is expected to put pressure on the private lenders’ profitability. This has now created uncertainty about the bank’s capital position and its ability to absorb additional costs.”
Supreme Court’s ruling on Yes Bank’s AT-1 bond write-off
The Supreme Court bench of Justices Dipankar Datta and Augustine George Masih said there was no reason to interfere with the Bombay High Court’s judgment, which had ruled in favour of bondholders.
“Therefore, for the reasons assigned in our judgment, we have held that we see no reason to interfere with the impugned judgment. The appeals are dismissed,” the bench said.
The court said it examined whether Yes Bank’s administrator could write off the bonds without a specific provision in the reconstruction scheme and whether the decision complied with the Reserve Bank of India’s (RBI) master circular and the terms of the bonds.
“Payment of annual coupon rate shall remain unaffected by the outcome of these appeals and must be made in terms of the Information Memorandum,” the bench said.
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