Holders of the Credit Suisse Group AG debt that was wiped out in March have forced the Swiss financial regulator to release the order that justified the write down.
(Bloomberg) — Holders of the Credit Suisse Group AG debt that was wiped out in March have forced the Swiss financial regulator to release the order that justified the write down.
A Swiss court has ordered Finma to release the decree that allowed Credit Suisse to wipe out roughly $17 billion of Additional Tier 1 notes, according to documents seen by Bloomberg. The Financial Times reported the disclosure earlier.
The liquidity assistance that Credit Suisse received from Switzerland were “public assistance measures, which have a direct positive effect on the liquidity and capital situation of CSG AG,” Finma said in its decision. That means the “viability event” has occurred, allowing the bank to write off the AT1s, according to the regulator.
The notes were written down after the Swiss government hastily arranged for UBS Group AG to takeover its troubled rival. Law firms including Quinn Emanuel Urquhart & Sullivan have been rallying aggrieved bondholders since the deal, arguing the decision to enact emergency legislation that Finma then invoked hours later was an unfair and disproportionate move.
Finma has defended its decision to wipe out AT1 holders, saying that provisions that allowed for the writedown were in the prospectus of the document. A spokesperson for Finma declined to comment.
–With assistance from Myriam Balezou and Laura Benitez.
(Adds more details of decision in third paragraph.)
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