HDFC Bank shares fall 2% to fresh 52-week low despite victory in Credit Suisse AT1 bonds cases in Bahrain

Shares of HDFC Bank dropped around 2% on Friday despite positive news regarding the private lender winning all seven cases filed against it in Bahrain by investors in the Credit Suisse AT-1 bonds matter.

India’s largest private lender shares dropped to a fresh 52-week low of Rs 681.90 apiece on Friday. The heavyweight stock has fallen around 4% in a week and 6% in a month, overall plunging around 31% in 2026 so far.

Bahrain court rejects claims against HDFC Bank over Credit Suisse AT1 bonds

HDFC Bank, in a statement to ET, said that the High Civil Court of Bahrain on September 9 passed favourable orders in the final two proceedings against it. Five similar cases had been rejected by the Bahrain court between July and August. This was expected to provide relief to the lender from a key legal overhang arising from allegations of mis-selling of the high-risk securities.

“All seven cases of legal proceedings against HDFC Bank in the CS AT1 bonds investment matter stand rejected by the Bahrain Court,” the bank told ET exclusively. “All allegations were rejected outright by the Court,” it added.

Also read |HDFC Bank says all seven Bahrain claims over Credit Suisse AT1 bonds rejected

The investors had alleged gross negligence, intentional misrepresentation, incorrect customer classification, non-disclosure of product features, misuse of financial leverage and violations of product-suitability principles in connection with their purchases of Credit Suisse AT1 bonds through the bank. HDFC Bank told ET that the court in Bahrain rejected the claims after investors failed to produce sufficient admissible evidence either to substantiate their claims against the lender or demonstrate that losses suffered by them were attributable to the bank.

The disputes stem from the write-down of Credit Suisse’s AT1 securities to zero during its emergency takeover by UBS in March 2023, which resulted in losses for bondholders globally. “Where required, the Bank will stand with its customers. However, the Bank is not in the business of underwriting the investments made by the customers out of their own judgement, and it will therefore defend itself rigorously against any unsubstantiated claims,” HDFC Bank said in its statement.

Earlier this year, HDFC Bank terminated three senior executives, including Group Head of Branch Banking Sampath Kumar, over their alleged role in the mis-selling of Additional Tier-1 (AT1) bonds linked to Credit Suisse, sources told ET. The two other executives, Harsh Gupta (Executive Vice President, Middle East, Africa and NRI onshore business) and Payal Mandhyan, were also let go following internal findings.

Gupta and Mandhyan had been suspended in January last year after the bank initiated an internal probe into the alleged mis-selling of debt products at its Dubai branch. The investigation found that several AT1 bond investors claimed they were encouraged to move their foreign currency non-resident (FCNR) deposits from India to Bahrain.

Also read | HDFC Bank sacks 3 senior executives over Credit Suisse AT1 bond mis-selling allegations

Governance worries at HDFC Bank

HDFC Bank shares saw a sharp sell-off in March this year after its former part-time Chairman Atanu Chakraborty resigned, stating that some practices within the bank did not match his personal values and ethics. The stock lost 12% in three days after his resignation on March 18, leading to a massive share sell-off that wiped off around Rs 1.6 lakh crore from the bank’s market value in just three sessions. The private lender then took several measures to address concerns.

The shares of the private lender sharply recovered some of the losses after a strong Q1 business update, all of which, however, were wiped out after its actual quarterly results. The heavyweight stock hitting fresh record lows is dragging down major indices as well as mutual funds.

What lies ahead for HDFC Bank share price?

Recently, Jefferies’ Global Head of Equity Strategy and emerging markets bull Christopher Wood removed HDFC Bank along with PB Fintech’s PolicyBazaar from his India long-only model portfolio, replacing them with Multi Commodity Exchange of India (MCX) and Lenskart Solutions in a shift toward exchange infrastructure and retail.

Goldman Sachs initiated coverage on HDFC Bank with a ‘Buy’ call and a target price of Rs 861 apiece. Goldman Sachs noted the bank’s core-PPOP inflection driven by margins and operating leverage, along with attractive valuations. The brokerage initiated coverage at 'Buy' on compelling valuations, despite expecting further downside earnings revisions. Nomura and Motilal Oswal Financial Services also have ‘Buy’ calls on the shares of HDFC Bank.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.