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Credit Suisse, AT1 bonds and taking the BIT between the teeth

Credit Suisse, AT1 bonds and taking the BIT between the teeth

Justina Stewart, Lucian Ilie and Anson Cheung, with Hanif Virji of Vivadum, consider potential investment treaty claims in an article in May’s edition of Butterworths’ Journal of International Banking & Financial Law.

Given the huge losses suffered by Additional Tier 1 bondholders, it is unsurprising that lawyers are exploring various potential avenues for investors to obtain redress. Justina, Lucian and Anson have co-written an article with Hanif Virji from Vivadum, looking at potential investment treaty claims.

Key Points

  • On 19 March, the Swiss Financial Market Supervisory Authority (FINMA) announced the approval of the takeover of Credit Suisse (CS) by UBS and the complete write-down of all CS’s Additional Tier 1 bonds (AT1s) in the sum of CHF16bn.
  • The financial markets, in particular fixed income investors, were shocked and the price of other banks’ AT1s plummeted.
  • The shock arose because under the deal AT1 bondholders received nothing, while shareholders received US$3.2bn. Shareholders usually rank below bondholders and the outcome for AT1 bondholders was contrary to the assumed capital hierarchy.
  • Other financial regulators also appear to have been taken by surprise, and immediately sought to distance themselves from the actions taken in relation to the AT1s.
  • There are several potential routes by which AT1 bondholders may be able to seek redress.
  • This article focuses on potential investment treaty claims, including preliminary thoughts on the important issue of potential quantum.

Read the full article, published in Butterworths, here.

This article was first published in the May issue of Butterworths Journal of International Banking and Financial Law. Find out more about Butterworths Journal of International Banking & Financial Law here.

Find out more

To find out more about Justina, Lucian and Anson, please contact Sam Carter on +44 (0)203 989 6669.

News 22 May, 2023

Authors

Justina Stewart

Call: 2010

Lucian ILIE

Call: 2021 (Solicitor Advocate since 2018); 2016 (Bucharest); 2013 (Paris)

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