Bondholders of Swiss bank Credit Suisse suffered losses of over $17 billion due to its merger with the country’s largest bank, UBS, according to the Financial Times.
The Swiss regulator Finma demanded that CHF16 billion ($17.26 billion) of first level AT1 bonds be written down to zero as part of the banks’ merger. The regulator stated that emergency state support would result in the full write-down of Credit Suisse’s AT1 shares’ nominal value by around CHF16 billion and increase its core capital.
The publication noted that Asian bank stocks have already fallen following news of UBS’s acquisition of Credit Suisse, and experts expect “further shocks on European markets.” Finma’s decision means that bondholders have lost more than shareholders and calls into question the hierarchy of claims in a bank’s bankruptcy. This was the largest AT1 debt write-down to date, according to the FT.
Previously, it was announced that UBS had acquired Credit Suisse for CHF3 billion ($3,24 billion). Initially, UBS had offered CHF1 billion for the deal.