Credit Suisse: Swiss watchdog justifies AT1 debt instruments
(CercleFinance.com) - The Swiss Financial Market Supervisory Authority (FINMA) said on Thursday that it had complied with the law by fully amortising Credit Suisse's "AT1" debt instruments.
As part of the merger between UBS and Credit Suisse, the Swiss regulator asked Credit Suisse to fully amortise these instruments, i.e. to reduce their nominal value to zero, a decision that caused a stir earlier this week.
Investors believe that FINMA has ignored the hierarchy of creditors by fully writing down the banking group's most junior debt.
The holders of these debts could see 17 billion dollars reduced to nothing, whereas they are normally senior to the shares and should have been saved first, IG France's teams point out.
However, FINMA points out that these securities are contractually provided for to be fully amortised should certain triggering events occur - notably in the event of the granting of exceptional public aid.
In addition to these contractual bases, the Swiss regulator says it also relied on an emergency ordinance surrounding the provision of liquidity by the Swiss National Bank (SNB) to systemically important banks.
On Sunday, a solution was found to protect clients, the financial centre and the markets, FINMA said.
In this context, it is important that Credit Suisse's banking business continues to operate without interruption and without problems: this is now the case, it he concluded.
Copyright (c) 2023 CercleFinance.com. All rights reserved.
As part of the merger between UBS and Credit Suisse, the Swiss regulator asked Credit Suisse to fully amortise these instruments, i.e. to reduce their nominal value to zero, a decision that caused a stir earlier this week.
Investors believe that FINMA has ignored the hierarchy of creditors by fully writing down the banking group's most junior debt.
The holders of these debts could see 17 billion dollars reduced to nothing, whereas they are normally senior to the shares and should have been saved first, IG France's teams point out.
However, FINMA points out that these securities are contractually provided for to be fully amortised should certain triggering events occur - notably in the event of the granting of exceptional public aid.
In addition to these contractual bases, the Swiss regulator says it also relied on an emergency ordinance surrounding the provision of liquidity by the Swiss National Bank (SNB) to systemically important banks.
On Sunday, a solution was found to protect clients, the financial centre and the markets, FINMA said.
In this context, it is important that Credit Suisse's banking business continues to operate without interruption and without problems: this is now the case, it he concluded.
Copyright (c) 2023 CercleFinance.com. All rights reserved.