The billion-euro write-off of AT1 bonds during the CS takeover has caused legal problems that are now escalating, with lawsuits being filed abroad targeting Switzerland. Despite the completion of the UBS takeover of Credit Suisse, the aftermath of state-organized rescue efforts continues to cause collateral damage.
Recently, a lawsuit was filed in a New York court challenging the write-off of AT1 bonds worth 16 billion francs during the emergency takeover. The plaintiffs argue that the write-off was inappropriate and seek compensation. This lawsuit is just one of many cases challenging Finma and Switzerland’s actions in the CS takeover. Foreign investors, including professional investors and wealthy individuals, suffered total losses due to these actions, leading to numerous legal actions seeking redress.
The majority of these complaints are currently pending before the Federal Administrative Court in St. Gallen, where proceedings have been ongoing for months due to an unprecedented number of cases. In addition to domestic legal challenges, international law firms are also pursuing legal action against Switzerland. Several lawsuits are being prepared in multiple countries, arguing that Finma’s actions violate international investment agreements and constitute expropriation. These parallel proceedings seek to hold Switzerland accountable on an international level with the hope of achieving a faster resolution through arbitration courts.
While the legal battles continue to unfold, the impact of the CS takeover and subsequent write-off of AT1 bonds has reverberated across the financial landscape. The controversy surrounding state-ordered write-offs has raised concerns about investor protections and regulatory authorities’ roles in managing financial crises. As lawsuits mount both domestically and internationally, their outcomes remain uncertain, with significant implications for Switzerland’s financial institutions and regulatory framework.
In conclusion, while UBS has completed its acquisition of Credit Suisse, but not without causing collateral damage through state-organized rescue efforts. The aftermath continues to ripple across various sectors and stakeholders as legal battles ensue with Finma and Switzerland facing numerous challenges from foreign investors seeking redress for their losses due to improper AT1 bond write-offs.
