Legal action continues over whether the the parties involved in wiping out the AT1 debt of Credit Suisse acted beyond their legitimate scope. The AT1s were designed after 2008 as ways of absorbing European bank losses from future crises.

International law firm Withers said yesterday that it is acting for Additional Tier 1 (AT1) bondholders whose investments were erased when UBS acquired Credit Suisse in an emergency takeover in March 2023.

Withers is representing investors across Asia, including in Hong Kong and Singapore, it said in a statement.

Following the issuance of “formal trigger letters” on behalf of Singapore investors, Withers said it will shortly initiate investment treaty arbitration against Switzerland by issuing similar letters on behalf of Hong Kong bondholders.

The arbitration will be pursued under the applicable bilateral investment treaty, which safeguards foreign investors against unlawful expropriation and unfair treatment, it added.

Earlier in October, a Swiss court ruled in a test case that complainants had a right to appeal the matter. A group of 3,000 investors had claimed that the UBS emergency takeover of Credit Suisse in March 2023, carried out at the behest of Swiss authorities, was unlawful. About SFr16.5 billion ($20.7 billion) of AT1 bonds were written down at the time. UBS bought its Zurich-listed rival for SFr3 billion – a deal viewed by some as cheap. However, Credit Suisse AT1 bondholders were wiped out, provoking anger among several asset managers.

Depending on the outcome of the Swiss court process, it remains unclear whether UBS or the Swiss government will have to compensate bondholders.

Getting under way
The proceedings will be jointly led by Withers partners Dr Robert Kovacs, based in London, and Pardeep Khosa in Singapore. The law firm, which said it is in advanced talks with Omni Bridgeway, a global legal finance provider, is confident of finalising funding arrangements imminently to support the proceedings against Switzerland.

“Momentum is accelerating across Asia as we bring together contingents of Credit Suisse bondholders to pursue their treaty-based rights,” Dr Kovacs said. “We have made substantial progress towards commencing proceedings against Switzerland and are encouraged by the high level of engagement from investors in Hong Kong and Singapore.”

Withers said it is continuing to receive approaches from investors across Asia.