More information is available at Holders of $17 billion in Credit Suisse bonds will have their investment wiped out as a result of the bank’s takeover by UBS, in a surprise move that is expected to ruffle European debt markets when they open on Monday.
As part of the historic agreement, Swiss financial regulator Finma ordered Credit Suisse’s additional tier one (AT1) bonds, a relatively risky class of bank debt, to be written down to zero.
The regulator informed Credit Suisse of the decision as it worked out the final details of its SFr3 billion takeover by UBS, which was announced on Sunday evening after several days of intense negotiations.
“The extraordinary government support will result in a complete writedown of the nominal value of all AT1 shares of Credit Suisse in the amount of around SFr16 billion,” Finma said.
However, several people involved in the negotiations said that eliminating AT1 holders — a move that would be semi historic in the banks history.