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Credit Suisse: Swiss court receives 230 complaints about high-risk bonds

2023-05-23T14:59:43.138Z

Highlights: 2,500 people have banded together to attack the decision of Finma, the policeman of the financial markets in Switzerland. UBS agreed to buy its competitor Credit Suisse for 3 billion Swiss francs (an equivalent sum in euros) in March. To facilitate this emergency buyout, FINMA had triggered a full amortization of the so-called AT1 bonds, which include complex instruments put in place after the 2008 financial crisis to strengthen banks. Their value, amounting to 16 billion francs, has been reduced to nothing.


Investors hope to voice their dissatisfaction with the handling of the Swiss banking crisis, which has wiped out the value of their holdings of these securities that are supposed to be protected first.


The Federal Administrative Court in Switzerland has received 230 complaints against the market supervisory authority over high-risk bonds whose value was reduced to zero during the Credit Suisse bailout, it said on Tuesday. These complaints come from some 2,500 people who have banded together to attack the decision of Finma, the policeman of the financial markets in Switzerland, detailed a spokesman of the court to AFP, confirming a press report. The court does not provide any further details as these are ongoing legal issues that "the court will deal with when it decides," he said. Contacted by AFP, Finma did not comment, referring to its decision in March and the Federal Council's message, without commenting beyond that.

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On 19 March, UBS agreed to buy its competitor Credit Suisse for 3 billion Swiss francs (an equivalent sum in euros) under pressure from the Ministry of Finance, the central bank and Finma to prevent the bank from collapsing. To facilitate this emergency buyout, FINMA had triggered a full amortization of the so-called AT1 bonds, which include complex instruments put in place after the 2008 financial crisis to strengthen banks. Their value, amounting to 16 billion Swiss francs, has been reduced to nothing. This decision had caused the stupor of investors, with bondholders normally coming first in the order of repayment in the event of bankruptcy.

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Since then, revelations about investor complaints against FINMA have multiplied. On Monday, the Financial Times reported that employees wanted to file a complaint against the financial markets watchdog following the cancellation of bonuses related to this type of obligation. Law firms Quinn Emanuel and Pallas, which already represent major investors who want to protest the move, have reportedly received several requests from senior bank executives, according to the British business daily. The amount relates to some $400 million in bonuses (€371 million) related to these bonds. The Sunday newspaper NZZ am Sonntag reported that a law firm in Japan was preparing a complaint and was trying to gather as many aggrieved creditors as possible to request international arbitration proceedings against Switzerland.

Source: lefigaro

All news articles on 2023-05-23

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