Yes Bank AT-1 verdict: Does this instrument fulfil the purpose it was originally designed for?

There is a deeper contradiction. In business-as- usual conditions, AT-1 ranks ahead of equity in the payment hierarchy. When solvency comes under pressure, however, its holders can face losses before shareholders have necessarily borne equivalent pain. The Yes Bank controversy, alongside the Credit Suisse episode, exposes this tension between the instrument’s debt-like appeal in normal times and equity-like vulnerability in distress. The precise contractual and legal circumstances differ, but both episodes challenge the assumption that this hybrid can reconcile competing interests without friction.