FINMA Itemises Credit Suisse's Bond Write-Down

Editorial Staff

27 March 2023

Switzerland’s main financial regulator has spelled out the basis for writing down the nominal value of high-risk bonds, Additional Tier 1 instruments, issued by , said.

On 19 March, the Swiss federal government authorised the regulator to write down the capital as part of the arrangements for UBS’s takeover of Credit Suisse for $3.23 billion.

PIMCO, the US fixed income asset manager, BlackRock and Invesco are among the most prominent losers from the write-down of AT1s. A report by Bloomberg last week said that traders at Goldman Sachs are preparing to take bids on claims against Credit Suisse that could see investors recover some value, potentially through litigation.

AT1 instruments in Switzerland are designed in such a way that they are written down or converted into Common Equity Tier 1 capital before the equity capital of the bank concerned is completely used up or written down. The instruments publicly issued by large banks are mainly held by institutional investors due to their risk profile and large denominations, FINMA said.