SMBC was aware of Yes Bank's AT-1 bonds litigation risk ahead of deal: Sources
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓Sumitomo Mitsui Banking Corporation knew about Yes Bank's AT-1 bond litigation risks before investing.
- ✓Sources said the bank factored in a negative outcome during valuation.
- ✓"It has not come as a surprise to them," one banker said.
Story at a Glance
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- MARKET
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- MoneyControl
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
A negative outcome to the prolonged litigation over additional tier-1 (AT-1) bonds was factored in by Japan's second largest financial conglomerate Sumitomo Mitsui Banking Corporation (SMBC) at the time of its investment in Yes Bank. According to highly placed sources, while the final verdict on the AT-1 bonds issue might have disappointed SMBC, "it has not come as a surprise to them", adding that an unfavourable outcome in the AT-1 bonds case was fully baked into the valuations of Yes Bank.
"Senior executives of SMBC were sensitized about this issue (AT-1 bonds litigation) in multiple meetings they had with investment bankers involved in the deal and with RBI officials they interacted with while firming up the investments in the bank," said a senior banker who didn't want to be named.
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