EU regulators express disagreement over AT1 bonds wipe-out by Swiss authorities

$17bn wiped out

Eurozone regulators have expressed disagreement over the Swiss authorities’ decision to wipe out $17bn of Credit Suisse’s additional tier one (AT1) bonds on Sunday night (19 March), following approval of the bank’s acquisition by UBS.

In a statement this morning (20 March), the European Banking Authority, European Central Bank and the Single Resolution Board sought to restore confidence in AT1 bonds, also known as contingent convertible (CoCo) bonds, to stem a market rout.  The regulators reasserted to markets that under the EU's resolution framework established after the Global Financial Crisis, equity shareholders should be the first to absorb losses, with AT1 bonds only required to be written down after all common equity tier 1 (CET 1) capital has been exhausted.  Government-supported buyout wipes out $17bn in C...