Credit Suisse withdraws appeal over AT1 writedown, court says

CREDIT Suisse Group withdrew an appeal over the writedown of AT1 bonds by Switzerland’s banking regulator, a Swiss court said.

Credit Suisse had argued that the wipeout of the junior debt, part of an emergency rescue and takeover by UBS Group, should not apply to so-called contingent capital awards made to some bankers because they were not issued by the lender itself “but awarded instead by other group companies to their respective employees”, the Swiss Federal Administrative Court said on Tuesday (May 23).

No reason was given for the bank’s decision by the court or what precautionary measures were sought. Credit Suisse spokespeople contacted after hours weren’t immediately available to comment.

On May 9, Credit Suisse decided against an appeal and withdrew its application for precautionary measures, according to the court.

Bondholders who saw the value of their bonds written down to zero have sued Finma to recover their investments. They argue the writedown was an unfair and disproportionate move that put shareholders before bondholders, contrary to the conventions of insolvency proceedings. Defenders of Finma’s decision point out that the risk of a writedown was clearly laid out in the bonds’ fine print.

The court said it has received around 230 appeals, involving roughly 2500 claimants, against the Mar 19 writedown. BLOOMBERG