Investors in CS bonds appear to want to sue Switzerland in a US court

Switzerland may face a lawsuit in the USA regarding the CS team’s emergency rescue operation. Due to the announcement that the so-called “AT1” bonds issued by Credit Suisse have become worthless, a group of international bond investors is planning to sue Switzerland in a US court for confiscation, the Financial Times reported on Friday evening.

The case is being put together by international law firm Quinn Emanuel, according to the report published by the British Business Journal, citing people familiar with the matter. It is possible that the lawsuit will be filed at the end of the year, but it is not yet certain that it will bear fruit. The report goes on to say that bondholders will essentially seek compensation for the “destruction” of their property rights.

The Federal Ministry of Finance did not want to comment on the article on Friday evening when asked by the AWP news agency. Quinn Emanuel also declined to comment on the report to the Financial Times.

Koen Emanuel has already filed complaints against Finma’s order to cancel the AT1 bonds with the Federal Administrative Court in St. Gallen on behalf of several bondholders. In August, the Federal Administrative Court estimated the total number of complainants in relation to AT1 bonds at about 3,000 people.

In March 2023, Finma ordered Credit Suisse to write down and write down high-interest AT1 bonds worth a total of about 16 billion francs as part of the emergency takeover of the troubled bank by UBS.

AT1 bonds were created after the 2008 banking collapse. Debentures can be converted into shares and written off if the financial institution runs into trouble. Finma explained that, with the help of the public sector, an event had occurred that justified this approach. (sda/awp)

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