Background: CS AT1 Bonds and the FINMA Decision
Following UBS’s acquisition of Credit Suisse in March 2023, the Swiss Financial Market Supervisory Authority (FINMA) ordered the full write-off of Additional Tier 1 (AT1) capital instruments, amounting to approximately CHF 16 billion.
While shareholders retained residual value, holders of CS AT1 Bonds incurred total losses, triggering widespread legal debate.
An Unlawful Write-off of AT1 Capital Instruments?
Bondholders argue that the write-off was unlawful, as the contractual conditions for a viability event may not have been met.
According to Attorney Lionel Patrick Serex, Credit Suisse continued to meet its capital and liquidity requirements, even at the height of the crisis, calling into question the legal basis for the FINMA decision.
Proceedings before the Federal Administrative Court
Approximately 3,000 investors have filed appeals before the Swiss Federal Administrative Court (Bundesverwaltungsgericht) seeking to overturn the FINMA ruling.
These proceedings raise key issues under Banking Law, Banking Regulation, Business Law and Commercial Law.
Broader Impact on Financial Regulation
Beyond the Credit Suisse case, the outcome may set important precedents regarding regulatory intervention, investor protection and judicial review of supervisory measures.
The case highlights the growing importance of appeal mechanisms in the enforcement of modern financial market regulation.
