A group of Credit Suisse bondholders in America sued the Swiss government. It is being demanded compensation for writing off $17 billion in bank debt, reports CNBC.
Last March, the largest Swiss bank UBS took over Credit Suisse, which was on the verge of bankruptcy. The deal, with the consent of the Swiss financial watchdog, canceled approximately 17 billion of AT1's bonds. dollars, which are the most attractive for investors in the hierarchy of this asset class, but carry the highest risk.
The disappointment of their holders was even greater because the shareholders of the acquired Credit Suisse bank received money after the takeover of UBS. They pointed out that this is a complete change to the debt repayment regime under Basel III, that is, the rules introduced after the 2008 financial crisis.
On Thursday, a law firm representing Credit Suisse bank bondholders filed a lawsuit in New York court. It described the Swiss authorities' decision to write off the value of part of the bank's debt as an "unlawful violation of the property rights of AT1 bondholders."
CNBC recalls that the AT1 bonds were created after the 2008 financial crisis, which revealed that some banks were "too big to fail," forcing authorities to bail them out with taxpayer money. AT1 bonds are automatically converted into capital when the bank's capital needs to be replenished due to losses.
