1 year ago
71 Axel Lehmann, president of Credit Suisse Group AG, Colm Kelleher, president of UBS Group AG, Karin Keller-Sutter, Switzerland's concern minister, Alain Berset, Switzerland's president, Thomas Jordan, president of the Swiss National Bank (SNB), Marlene Amstad, chairperson of the Swiss Financial Market Supervisory Authority (FINMA), near to right, during a quality league successful Bern, Switzerland, connected Sunday, March 19, 2023.
Pascal Mora | Bloomberg | Getty Images
Swiss regulator FINMA connected Thursday defended its determination to instruct Credit Suisse to constitute down its AT1 bonds — a arguable portion of the lender's exigency merchantability to UBS — saying it was a "viability event."
The regulator said the indebtedness Credit Suisse received from the Swiss National Bank past week, backed by the national government, meant the conditions for a writedown had been met.
The regulator instructed Credit Suisse to constitute down 16 cardinal Swiss francs of AT1 bonds, wide regarded arsenic comparatively risky investments, to zero, portion equity shareholders volition person payouts astatine the stock's takeover value.
This determination upended the accustomed European hierarchy of restitution successful the lawsuit of a slope nonaccomplishment nether the post-financial situation Basel III framework, which ordinarily places AT1 bondholders supra banal investors. Bondholders are exploring ineligible action implicit the contentious writedown.
"The AT1 instruments issued by Credit Suisse contractually supply that they volition beryllium wholly written down successful a 'viability event,' successful peculiar if bonzer authorities enactment is granted," FINMA said successful a statement Thursday.
"As Credit Suisse received bonzer liquidity assistance loans secured by a national default warrant connected 19 March 2023, these contractual conditions were met for the AT1 instruments issued by the bank."
After its stock terms plunged to an all-time debased past week, Credit Suisse announced that it had secured a indebtedness of up to 50 cardinal Swiss francs from the Swiss National Bank, and provided important liquidity assistance to the lender arsenic authorities scrambled to enactment unneurotic a rescue woody connected Sunday.
The Swiss national authorities enacted an exigency ordinance to warrant the further liquidity assistance from the SNB to Credit Suisse, successful bid to guarantee the palmy implementation of the UBS takeover.
The ordinance besides authorized FINMA to "order the borrower and the fiscal radical to constitute down Additional Tier 1 capital," the regulator said Thursday.
"On Sunday, a solution could beryllium recovered to support clients, the fiscal centre and the markets," said FINMA CEO Urban Angehrn.
"In this context, it is important that CS's banking concern continues to relation smoothly and without interruption. That is present the case."
