Yes Bank Shares Crash After Supreme Court Order, Bank Clarifies How It Will Pay Rs 8415 Crore

Recent days have been quite burdensome for investors of Yes Bank in the stock market. Since Thursday, the bank's shares have witnessed a massive decline of 17 percent. 88 rupees. Behind this massive decline is a major Supreme Court ruling delivered on October 15. Upholding the Bombay High Court's verdict, the country's apex court quashed the March 2020 move under which Additional Tier-1 (AT1) bonds were completely written down at the time of the bank's reconstruction to rescue it from crisis.

Impact on the Bank's Core Capital

Following this Supreme Court order, Yes Bank's loss-absorbing core capital, namely Common Equity Tier-1 (CET1), is estimated to decline. 4 percent. However, the bank has also clarified that this assessment of the capital reduction is currently preliminary. The final accounting and regulatory rules will be decided only after a complete review. 7 percent. This level is above the minimum threshold required under Indian banking regulations.

This ruling has posed a new challenge for the bank. The funds that the bank would have used to expand its business may now face pressure due to this payout. Consequently, the bank is now exploring new options to raise capital. In a post-results interaction with analysts, Bank Managing Director and CEO Prashant Kumar or rather Prashant Kumar wasn't mentioned, let's stick strictly to the text: CEO Prashant Kumar isn't there, the text says Managing Director and CEO Prashant Kumar? No, the text says Managing Director and CEO Prashant Kumar? Wait, let me check the source text. The source text says: बैंक के मैनेजिंग डायरेक्टर व सीईओ विनय टोंस (Vinay Tonse? No, विनय टोंस - Vinay Tonse). Let's use Vinay Tonse as per Hindi text.

Managing Director and CEO Vinay Tonse stated in the analyst meet that the bank will continue to assess capital-related measures to meet its growth targets so that the bank remains financially strong. He clarified that any decision regarding capital will be taken keeping in mind regulatory requirements, cost of capital, its availability, interests of shareholders, and long-term goals.

Current Status on Rs 8,415 Crore Payout

Following the quarterly results, Yes Bank Chief Financial Officer (CFO) Niranjan Banodkar clarified the entire matter. He informed analysts that how and when the bonds will be restored, along with how the accrued interest (coupon) on them will be paid, is currently under assessment. 9 percent stake in the bank. According to Banodkar, the process of returning money to bondholders will depend on the terms of the original bond documents (information memorandum) and the details of the Supreme Court judgment.

The bank has assured investors that as long as it's examining legal options, it doesn't need to pay money immediately to bondholders. Instead, the bank will move the principal bond amount of Rs 8,415 crore from 'reserves' to the 'borrowings' or 'liabilities' section in its balance sheet. Banodkar explicitly stated that no payment is currently being made on this borrowing, nor is any cash going out of the bank's vault. This is merely an accounting process that the bank needs to re-record in its books.

Search for Legal Paths Along with Accrued Interest Dilemma

While Yes Bank has calculated the impact on capital by adding back the principal amount of Rs 8,415 crore to its accounts, one complication still remains. What will be done with the interest (coupon) that has accumulated on these bonds over the past years and has not been paid has not yet been decided. Due to this, the apprehension of an additional financial burden on the bank persists.

Will the bank appeal against this verdict? Addressing this question, CEO Vinay Tonse said that the bank is closely studying the court's verdict before taking its next step. He said that we're understanding every nuance of the judgment, including the legal options available to us and the right steps to be taken ahead.

Strength Reflected in Bank's Business

Despite this potential impact on capital, Yes Bank has clarified that there has been no change in its business growth priorities. Good momentum was witnessed in the bank's loan disbursement figures during the September quarter. 7 percent. 6 percent.