US Court Dismisses Lawsuit Against Switzerland Over Credit Suisse AT1 Bond Write-Off
A US federal court dismissed a lawsuit against Switzerland and its financial regulator Finma, brought by investors over the write-off of AT1 bonds during Credit Suisse's takeover by UBS in March 2023. The court cited diplomatic immunity.
Finma, Switzerland's markets watchdog, had ordered the full write-off of over 16 billion francs worth of AT1 bonds issued by Credit Suisse. These bonds, part of a bank's core capital, can be converted into equity or written off in certain circumstances, known as 'viability events'.
The Federal Administrative Court initially upheld Finma's decision. However, around 3000 complainants, including international investors like VEB Fonds Pensionskasse, filed around 360 proceedings against Finma. The court later partially satisfied these complaints, but the unwinding process remains undecided.
The dismissal of the US lawsuit against Switzerland and Finma brings some closure to the international investors' legal battle over the AT1 bond write-off. Meanwhile, the situation in Switzerland continues to evolve, with the Federal Administrative Court yet to finalize its decision on the unwinding process.
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