ZURICH (Reuters) -Swiss market regulator FINMA said on Wednesday it would appeal a ruling by a Swiss court that revoked a decree by the financial watchdog ordering the write-off of Credit Suisse debt during the bank’s collapse in 2023.
The Federal Administrative Court said on Tuesday that the writing off of 16.5 billion Swiss francs ($20.53 billion) in Credit Suisse Additional Tier 1 (AT1) bonds was unlawful, boosting bondholders’ hopes of recouping losses and raising fresh questions about how authorities handled the bank’s demise.
After unravelling, Credit Suisse was acquired by its old rival UBS in an emergency operation engineered by Swiss authorities.
FINMA’s announcement that it would challenge the administrative court’s ruling at Switzerland’s Supreme Court came as expected by analysts.
“The write-down was part of an overall package to stabilise Credit Suisse via a merger with UBS, for which extraordinary state support measures were necessary,” FINMA said.
Analysts say that even if appeals against the court ruling fail, investors are not guaranteed to recover the entire sum because the bonds had lost value before Credit Suisse’s collapse.
The 2023 write-off stunned markets by prioritizing shareholder compensation over bondholder claims, upending the normal capital structure hierarchy.
(Reporting by Ludwig Burger and Dave GrahamEditing by Madeline Chambers)
