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☆ Swiss regulator defends its decision to write off AT1 bonds
▼ + stars: | 2023-03-23 | by ( ) www.reuters.com time to read: +1 min

ZURICH, March 23 (Reuters) - Switzerland's financial market regulator FINMA defended its decision to impose steep losses on Credit Suisse (CSGN.S) bond holders on Thursday, saying the decision was legally watertight. On Sunday, Switzerland announced a multi-billion franc rescue of Credit Suisse, which will see it taken over by UBS. As part of that deal the Swiss regulator ordered 16 billion Swiss francs ($17.49 billion) of its Additional Tier 1 debt to be written down to zero, while shareholders received some compensation. "The AT1 instruments issued by Credit Suisse contractually provide that they will be completely written down in a 'viability event', in particular if extraordinary government support is granted," FINMA said. "As Credit Suisse received extraordinary liquidity assistance loans secured by a federal default guarantee on 19 March 2023, these contractual conditions were met for the AT1 instruments issued by the bank," it added.

☆ Swiss CoCo litigation may have a broader payoff
▼ + stars: | 2023-03-23 | by ( Neil Unmack | ) www.reuters.com time to read: +4 min

LONDON, March 23 (Reuters Breakingviews) - Credit Suisse’s (CSGN.S) CoCos are shaping up to be the bondholder litigation case of the century. Investors are in uproar over the government’s decision to wipe out Credit Suisse’s Additional Tier 1 securities over the weekend, while preserving 3 billion Swiss francs for shareholders. They can argue that state support for Credit Suisse did not represent a viability event because the authorities injected liquidity but not capital. Credit Suisse’s AT1 bonds are currently trading at around 6% of par value, rather than the zero the Swiss authorities declared them to be worth. Some Credit Suisse AT1 bondholders are seeking legal advice.

☆ Credit Suisse rescue creates bank twice the size of Switzerland's economy
▼ + stars: | 2023-03-23 | by ( Hanna Ziady | ) edition.cnn.com time to read: +9 min

London CNN —The last-minute rescue of Credit Suisse may have prevented the current banking crisis from exploding, but it’s a raw deal for Switzerland. An aerial view of the headquarters of Credit Suisse, center, and UBS, left, at Paradeplatz in Zurich, Switzerland on Sunday, 19 March, 2023. Credit Suisse is “part of Switzerland’s identity,” said Hans Gersbach, a professor of macroeconomics at ETH university in Zurich. “The Credit Suisse Swiss bank is a fine asset that we are very determined to keep,” Kelleher said Sunday. Integration is difficultAt $3.25 billion, UBS got Credit Suisse for 60% less than the bank was worth when markets closed two days prior.

LONDON, March 23 (Reuters) - Credit Suisse (CSGN.S) bondholders are seeking legal advice after the Swiss regulator ordered 16 billion Swiss francs ($17.5 billion) of Additional Tier-1 (AT1) debt to be wiped out under its rescue takeover by UBS (UBSG.S). Not only did bondholders expect protection, but UBS is paying $3.23 billion to Credit Suisse shareholders. One Paris-based manager of a debt fund that held Credit Suisse AT1s said he had been "spammed" with emails from lawyers. Facing any challenge could be Credit Suisse, its new owner UBS, Swiss regulator FINMA or the Swiss government. It also cited an emergency March 19 ordinance which it said authorised FINMA to instruct Credit Suisse to write off the bonds.

☆ Swiss regulator says central bank loan to Credit Suisse justified AT1 bond writedown
▼ + stars: | 2023-03-23 | by ( Elliot Smith | ) www.cnbc.com time to read: +2 min

Swiss regulator FINMA on Thursday defended its decision to instruct Credit Suisse to write down its AT1 bonds — a controversial part of the lender's emergency sale to UBS — saying it was a "viability event." The regulator said the loan Credit Suisse received from the Swiss National Bank last week, backed by the federal government, meant the conditions for a writedown had been met. The regulator instructed Credit Suisse to write down 16 billion Swiss francs of AT1 bonds, widely regarded as relatively risky investments, to zero, while equity shareholders will receive payouts at the stock's takeover value. "As Credit Suisse received extraordinary liquidity assistance loans secured by a federal default guarantee on 19 March 2023, these contractual conditions were met for the AT1 instruments issued by the bank." The Swiss federal government enacted an emergency ordinance to guarantee the additional liquidity assistance from the SNB to Credit Suisse, in order to ensure the successful implementation of the UBS takeover.

☆ These 10 funds had over $100 million each in Credit Suisse bonds — which are now worth nothing
▼ + stars: | 2023-03-22 | by ( Ganesh Rao | ) www.cnbc.com time to read: +2 min

A number of funds could be facing over $100 million in losses on their Credit Suisse investments after the lender's forced merger with its rival UBS . The funds face losses on Credit Suisse's additional tier-1 bonds (AT1), according to CNBC Pro analysis, after Swiss regulators deemed them worthless as part of the emergency merger . The Swiss regulator FINMA saw the merger between Credit Suisse and UBS as a trigger event to write down 16 billion Swiss francs ($17 billion) worth of the bonds. The following table shows the funds that held AT1 bonds with a par amount of at least $100 million each as of Mar. About 80 funds run either directly by PIMCO or one of its affiliates, held Credit Suisse AT 1 bonds, according to CNBC's analysis.

[1/2] The logo of the Swiss bank Credit Suisse is seen in Zurich, Switzerland March 20, 2023. While the nation's central bank and financial regulator publicly declared that Credit Suisse was sound, behind closed doors the race was on to rescue the nation's second-biggest bank. The Swiss National Bank declined to comment while the finance ministry did not respond to a request for comment. Battered by years of scandals and losses, Credit Suisse for months had been battling a crisis of confidence of its own making. By Wednesday, two days later, Credit Suisse was swept up in a full-blown crisis.

☆ Everyone's talking about Credit Suisse's risky bonds. Here's what they are and why they matter
▼ + stars: | 2023-03-21 | by ( Sophie Kiderlin | ) www.cnbc.com time to read: +4 min

Fabrice Coffrini | AFP | Getty ImagesAdditional tier-one bonds, AT1s, CoCos? AT1 bonds is short for additional tier-one bonds. In short, they are bank bonds that are considered a relatively risky form of junior debt, therefore coming with a higher yield and are often bought by institutional investors. watch nowHow they work and why they're riskyOne of the key attributes of AT1 bonds is that they are designed to absorb losses. Finally, AT1 bonds are callable rather than maturing at a specific point.

☆ Credit Suisse bondholders prepare lawsuit after contentious $17 billion writedown
▼ + stars: | 2023-03-21 | by ( Elliot Smith | ) www.cnbc.com time to read: +3 min

A sign of Credit Suisse bank is seen at their headquarters in Zurich on March 20, 2023. A number of Credit Suisse bondholders said Tuesday that they were considering legal action after $17 billion of the bank's additional tier-one (AT1) bonds were wiped out as part of its emergency sale to UBS . David Benamou, chief investment officer at Axiom Alternative Investments and a holder of Credit Suisse AT1 bonds, told CNBC on Tuesday that he would be joining the lawsuit along with, he imagined, "probably most bondholders." Was Credit Suisse failing? The Credit Suisse write-down represents the largest loss ever inflicted on AT1 investors since their inception.

☆ 'A financial banana republic': UBS-Credit Suisse deal puts Switzerland's reputation on the line
▼ + stars: | 2023-03-21 | by ( Sam Meredith | ) www.cnbc.com time to read: +4 min

Fabrice Coffrini | Afp | Getty Imageswatch now"The Credit Suisse debacle will have serious ramifications for other Swiss financial institutions. A country-wide reputation with prudent financial management, sound regulatory oversight, and, frankly, for being somewhat dour and boring regarding investments, has been wiped away," Marenzi said. Credit Suisse traded up 3.5% during afternoon deals after ending Monday's session down a whopping 55%. Credit Suisse bond wipeoutUnder the terms of the emergency takeover, investors in Credit Suisse's additional tier-one bonds — widely regarded as a relatively risky investment — will see the value of their holdings slashed to zero. One euro was last seen trading at 0.9961 Swiss francs, weakening from 0.9810 when compared with March 14.

☆ UBS to take over Credit Suisse, assume up to 5 billion Swiss francs in losses
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +4 min

BERN, March 19 (Reuters) - UBS (UBSG.S) agreed to buy rival Swiss bank Credit Suisse (CSGN.S) for 3 billion Swiss francs ($3.23 billion) in stock and agreed to assume up to 5 billion francs ($5.4 billion) in losses, in a shotgun merger engineered by Swiss authorities to avoid more market-shaking turmoil in global banking. The deal includes 100 billion Swiss francs ($108 billion) in liquidity assistance for UBS and Credit Suisse from the Swiss central bank. In that eventuality, UBS would assume the first 5 billion francs, the federal government the next 9 billion francs, and UBS would assume any further losses, the government said. Credit Suisse Additional Tier 1 shares with a nominal value of around 16 billion francs ($17.2 billion) will be written down completely after the Swiss government provided support for UBS' takeover of Credit Suisse, FINMA said. Reuters Graphics Reuters GraphicsThe Swiss government said that it was also giving UBS a guarantee of 9 billion Swiss francs "assume potential losses" from assets as part of the transaction.

Credit Suisse Group AG’s emergency merger with UBS Group AG will wipe out the bank’s riskiest bonds, rattling investors in the quarter-trillion-dollar market for similar bank debt. About 16 billion Swiss francs, or about $17.3 billion, of the bank’s additional tier 1 bonds will be completely written down, Switzerland’s financial regulator, Finma, said in a Sunday statement. Credit Suisse also said it was informed by Finma that the bonds would be “written off to zero.”

☆ The $17 billion wipeout of Credit Suisse bondholders has not gone down well in Europe
▼ + stars: | 2023-03-20 | by ( Sophie Kiderlin | ) www.cnbc.com time to read: +1 min

Credit Suisse's additional tier one bonds are set to be wiped out following the struggling bank's takeover by UBS. One section of Credit Suisse's bondholders is set to be wiped out following the struggling bank's takeover by UBS, causing them to see investments worth 16 billion Swiss Francs ($17 billion) become worthless. The move has angered Credit Suisse AT1 bond holders as their investments have seemingly been lost, while shareholders will receive payouts as part of the takeover. Therefore, the decision "can be interpreted as an effective subordination of AT1 bondholders to shareholders," Goldman Sachs' credit strategists said in a research note published Sunday. "It also represents the largest loss ever inflicted to AT1 investors since the birth of the asset class post-global financial crisis," they added.

☆ UBS' dramatic takeover of Credit Suisse was the deal neither bank wanted. Here's some of the passive-aggressive digs from both sides.
▼ + stars: | 2023-03-20 | by ( Matt Turner | ) www.businessinsider.com time to read: +5 min

UBS acquired Credit Suisse in a rescue takeover over the weekend. But Credit Suisse didn't want to be rescued, and UBS didn't want to have to be the rescuer. For example, the first official word of the deal came from the Swiss National Bank, which announced: "UBS today announced the takeover of Credit Suisse." Next, Credit Suisse announced: "Credit Suisse and UBS to Merge." In 2019, after UBS announced Khan's hire, the chief operating officer at Credit Suisse ordered a colleague to spy on him.

☆ 'Shotgun wedding': What the UBS rescue of Credit Suisse means for global markets
▼ + stars: | 2023-03-20 | by ( Elliot Smith | ) www.cnbc.com time to read: +6 min

Axel Lehmann, chairman of Credit Suisse Group AG, left, and Colm Kelleher, chairman of UBS Group AG, during a news conference in Bern, Switzerland, on Sunday, March 19, 2023. "The accelerating loss of confidence and the escalation over the last few days have made it clear that Credit Suisse can no longer exist in its current form," Lehmann said. In equal parts "shotgun wedding" and arranged marriage, UBS agreed to buy stricken domestic rival Credit Suisse for 3 billion Swiss francs ($3.25 billion) on Sunday. The government will offer a loss guarantee of up to 9 billion Swiss francs, with UBS assuming the first 5 billion of potential losses. Shares of both UBS and Credit Suisse plunged on Monday morning, however.

FINMA, the Swiss regulator, said the decision would bolster the bank's capital. Engineered in the wake of the global financial crisis, AT1 bonds are a form of junior debt that counts towards banks' regulatory capital. "It's stunning and hard to understand how they can reverse the hierarchy between AT1 holders and shareholders," said Jerome Legras, head of research at Axiom Alternative Investments, an investor in Credit Suisse's AT1 debt. Credit Suisse's AT1 debt had rallied earlier on Sunday amid reports that shareholders would receive something in a deal with UBS, raising hopes that bondholders would be protected. The move by the Swiss regulator could make it harder for other lenders to raise new AT1 debt, investors said.

☆ UBS to take over Credit Suisse, assume up to 5 bln Swiss francs in losses
▼ + stars: | 2023-03-19 | by ( ) www.reuters.com time to read: +4 min

The deal includes 100 billion Swiss francs ($108 billion) in liquidity assistance for UBS and Credit Suisse from the Swiss central bank. In that eventuality, UBS would assume the first 5 billion francs, the federal government the next 9 billion francs, and UBS would assume any further losses, the government said. Credit Suisse Additional Tier 1 shares with a nominal value of around 16 billion francs ($17.2 billion) will be written down completely after the Swiss government provided support for UBS' takeover of Credit Suisse, FINMA said. Authorities had been scrambling to rescue Credit Suisse, among the world's largest wealth managers, before financial markets reopened on Monday. Reuters Graphics Reuters GraphicsThe Swiss government said that it was also giving UBS a guarantee of 9 billion Swiss francs "assume potential losses" from assets as part of the transaction.

☆ UBS salvages most value from Credit Suisse wreck
▼ + stars: | 2023-03-19 | by ( Liam Proud | ) www.reuters.com time to read: +4 min

Meanwhile the government will cover up to 9 billion Swiss francs of losses, such as markdowns on Credit Suisse assets, past a certain threshold. A UBS takeover is preferable to the Swiss government nationalising Credit Suisse or winding it down. Follow @liamwardproud on TwitterCONTEXT NEWSUBS will rescue Credit Suisse in a deal worth about 3 billion Swiss francs, Swiss authorities and the two banks said on March 19. Shareholders in Credit Suisse will get one new UBS share for every 22.48 shares they currently hold. Based on UBS’s closing price on March 17 the offer values Credit Suisse shares at 0.76 Swiss francs each, well below the last closing price of 1.86 Swiss francs.

☆ Top UBS executives defend their 'emergency rescue' of Credit Suisse. Here's what comes next.
▼ + stars: | 2023-03-19 | by ( Rebecca Ungarino | ) www.businessinsider.com time to read: +5 min

UBS sought to reassure investors that the Credit Suisse deal wouldn't disrupt long-term strategy. UBS agreed to acquire Credit Suisse on Sunday in a deal arranged by the Swiss government. Credit Suisse has faced crisis after crisis in recent years, from Archegos to a spying scandal. "These events could alter the course of not only European banking but also the wealth management industry more generally," Georgiou said. "It's an outcome that we may not have hoped for," Hamers said of the Credit Suisse deal.

FRANKFURT/LONDON, March 19 (Reuters) - Swiss authorities are examining imposing losses on Credit Suisse (CSGN.S) bondholders as part of a rescue of the bank, two sources with knowledge of the matter said on Sunday. Losses on bondholders may need to be larger if Credit Suisse were wound down rather than if it were taken over by UBS, one of the sources said. Authorities are trying to engineer a UBS takeover of Credit Suisse before financial markets reopen on Monday. A $1 billion deal would mean Credit Suisse shareholders getting a fraction of what their shares were worth on Friday. "I would be surprised if Credit Suisse bondholders, including AT1 investors, weren’t made whole.

☆ Exclusive: Swiss authorities mull imposing losses on Credit Suisse bondholders
▼ + stars: | 2023-03-19 | by ( John O'Donnell | ) www.reuters.com time to read: +2 min

FRANKFURT, March 19 (Reuters) - Swiss authorities are examining imposing losses on Credit Suisse (CSGN.S) bondholders as part of a rescue of the bank, two sources with knowledge of the matter said on Sunday. Losses on bondholders could need to be larger if Credit Suisse were wound down rather than if it were taken over by UBS, one of the sources said. Authorities are trying to engineer a UBS takeover of Credit Suisse before financial markets reopen on Monday. Credit Suisse and UBS declined to comment. Credit Suisse bonds plunged into distressed territory at or below 30 cents on the dollar this week as investors worried about the health of the bank even after the Swiss National Bank provided the lender with a $54 billion emergency loan.

LONDON, March 19 (Reuters) - Credit Suisse has written down its Additional Tier 1 bonds to zero as part of its takeover by UBS, angering some bondholders who thought they would be better protected in a rescue deal announced on Sunday. The Swiss regulator and Credit Suisse said that the bonds, which are a riskier type of debt than traditional bonds, have a notional value of 16 billion Swiss francs ($17.24 billion). Credit Suisse said it had been informed by the regulator, FINMA, on Sunday of the decision to write the bonds down. Some bondholders were angry at the move to write down the bonds to zero, especially as it appears bondholders will fare worse than shareholders in the deal. ($1 = 0.9280 Swiss francs)Writing by Tommy Reggiori Wilkes; Editing by Hugh LawsonOur Standards: The Thomson Reuters Trust Principles.

☆ Fail or sale? What could be next for stricken Credit Suisse
▼ + stars: | 2023-03-18 | by ( Elliot Smith | ) www.cnbc.com time to read: +6 min

In this article CSG.N-CHSBNY Follow your favorite stocks CREATE FREE ACCOUNTPeople walk by the New York headquarters of Credit Suisse on March 15, 2023 in New York City. Barry Norris, CEO of Argonaut Capital, which has a short position in Credit Suisse, stressed the importance of a smooth outcome. watch nowEuropean banking shares have suffered steep declines throughout the latest Credit Suisse saga, highlighting market concerns about the contagion effect given the sheer scale of the 167-year-old institution. At the moment, the forecaster sees the problems at Credit Suisse and SVB as "a collection of different idiosyncratic issues." "We know that for most banks, including Credit Suisse, that exposure to higher yields has largely been hedged.

☆ UBS mulls takeover of Credit Suisse with possible Swiss government guarantees
▼ + stars: | 2023-03-18 | by ( John O'Donnell | ) www.reuters.com time to read: +3 min

The people said that UBS was coming under pressure from the Swiss authorities to carry out a takeover. UBS, Credit Suisse, and Switzerland's financial regulator FINMA declined to comment when approached by Reuters. Regulators have urged Credit Suisse Group to pursue a deal with Swiss rival UBS as the troubled bank began a make-or-break weekend after some rivals grew cautious in their dealings with it. The turmoil at Credit Suisse has put another dent in the Swiss reputation for financial stability on which UBS depends. Any tie-up would be one of the biggest since the global financial crisis.

☆ UBS, regulators race to seal Credit Suisse deal as soon as Saturday, Financial Times reports
▼ + stars: | 2023-03-18 | by ( ) www.reuters.com time to read: +1 min

March 18 (Reuters) - The Swiss National Bank and Swiss regulator FINMA have told their international counterparts they regard a deal with UBS Group (UBSG.S) as the only way to prevent a collapse in confidence in Credit Suisse Group (CSGN.S), the Financial Times reported on Saturday. UBS, Credit Suisse and key regulators are rushing to finalise a deal on the merger of the two Swiss banks as soon as Saturday evening, the FT reported, citing people familiar with the matter. UBS and Credit Suisse did not immediately respond to a Reuters request for comment. Reuters earlier reported that UBS was coming under pressure from the Swiss authorities to carry out a takeover of its local rival to get the market turmoil surrounding Credit Suisse under control. The plan could see the Swiss government offer a guarantee against the risks involved, while Credit Suisse's Swiss business could be spun off.

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