Switzerland’s financial regulator FINMA issued a statement justifying its decision to wipe out $17bn of Credit Suisse’s additional tier one (AT1) bonds, as part of the deal with UBS to acquire the bank.
The regulator said today (23 March) that the AT1s "contractually provide that they will be completely written down in a ‘viability event', in particular if extraordinary government support is granted", adding that the bank received emergency loans backed by a government guarantee on 19 March. FINMA's decision on Sunday angered bondholders, given unsecured bondholders traditionally rank above equity holders in the capital structure. It forced the Bank of England and EU regulators to step in with veiled disagreement to the Swiss regulator's move, in order to stem a potential market rout. ...
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