India's Yes Bank expects AT1 reinstatement to cut core capital ratio by 250 bps

On Thursday, India's Supreme Court reversed the 2020 rescue-era write-off of Yes Bank's AT1 instruments, valued at 84 billion rupees ($883.7 million). The verdict is a setback for the lender and for the regulators who had backed that decision. On Friday, Yes Bank said restoring the bonds would lower its core capital ratio by roughly 250 basis points.

Even so, the bank projects its tier-1 ratio holding at 14% pro forma. Yes Bank is still examining the verdict and its consequences, and it intends to provide more details in due course.

S&P Global Ratings does not expect the decision to alter its ratings on Yes Bank, although the ruling will weigh on future earnings. The agency noted that the lender's CET1 stood at 13.87% at end-March 2026, enough to absorb the 250 basis point hit and remain comfortably above the 5.5% floor. S&P also expects the risk-adjusted capital ratio to stay in the 8% to 8.5% range through March 2028, against 9% in March 2026, and it remains unknown whether the bank will contest the decision.