I analyzed the treatment of Yes Bank’s Additional Tier‑1 (AT‑1) bonds after the Supreme Court order, focusing on their liability size, capital impact, and the administrator’s actions.
Yes Bank has a liability of 8400 cr in AT‑1 instruments.
It has higher capital of 8400 cr but will have to take a loss of 8400 cr as a profit reversal.
The primary sale was always to institutions; the problem was that the bank made secondary sales (some 3rd party was the seller) to retail.
Although the reconstruction order did not include writing down AT‑1 bonds, the administrator still performed a writedown.
RBI can also lower the interest rate to zero, reflecting its discretionary power over AT‑1 coupon settings.