Final scheme did not contain specific reference to write down of AT1 bonds: Yes Bank

The final reconstruction scheme for Yes Bank did not have a specific reference to writing down AT1 bonds but the private sector lender decided to do so based on legal advice.

This is part of the auditor’s note which is included the in the fourth quarter results posted by Yes Bank late on Wednesday night.

“The final Scheme issued by the Government of lndia on 13 March 2020 does not contain any reference to the write back of the A Tl securities. Based on the legal advice on the contractual terms of the AT 1 bonds, the bank has fully written back AT 1 bonds aggregating to Rs 8,415 crores on 14 March 2020,” the auditors noted.

However, the draft reconstruction scheme proposed on March 6 2020 had also envisaged that the bank would be able to write back Additional Tier 1 (A Tl) securities amounting to Rs. 8,695 crores to equity, it further said.

This action by the bank has been legally challenged through a Writ Petition in the Bombay High Court.

The write down on the bonds helped the bank report a net profit of Rs 2,628.61 crore for the fourth quarter of 2019-20. However, without this cushion, the bank would have reported a net loss of Rs 3,668.33 crore for the January to March 2020 quarter as against a net loss of Rs 1,507 crore in the same period a year ago.

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