UBS - Credit Suisse investors sue Swiss regulators over $18B debt writedown - reports

2023-04-21 09:25:21 ET

Investors holding more than CHF 4.5B ($5.1B) of Credit Suisse ( NYSE: CS ) bonds have sued Swiss financial regulators after their investments were wiped out as a result of the government-led sale of Credit Suisse to rival UBS ( UBS ), several news outlets reported Friday.

In that deal, Credit Suisse's ( CS ) ~CHF 16B ($18B) of Additional Tier 1 Capital debt was written off to zero. Meanwhile, Credit Suisse shareholders are set to get one UBS share for every 22.48 CS shares they hold. That's unusual because in distressed situations, noteholders usually get paid before shareholders do.

Quinn Emmanuel Urquhart & Sullivan, the law firm representing the bondholders, said Friday the suit is the fist step in seeking redress for clients whose assets it alleged were expropriated during the Credit Suisse ( CS ) takeover, Reuters reported.

"We are committed to rectifying this decision, which is not only in the interests of our clients but will also strengthen Switzerland's position as a key jurisdiction in the global financial system," Thomas Werlen, Quinn Emanuel's Swiss managing partner, told Reuters.

Last month, Finma, the Swiss financial markets regulator, stood by its decision to mark down the AT1 debt, saying contractually they can be written down completely in a "viability event."

More on Credit Suisse ( CS ) and UBS ( UBS ):

• Credit Suisse suffers outflows of $5.6B since UBS deal
• EU regulators to focus on liquidity rules after Credit Suisse debacle
• SNB chief says Credit Suisse Swiss unit unlikely to be spun off
• UBS Swallows Credit Suisse: More Holes Than Chees

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