Credit Suisse Group AG (NYSE: CS) retreated its position after shares change of 1.60% in pre trading session as it traded at $0.87 in previous session. The 52-week high of the share price is 7.12 and 52-week low of the share price is 0.82.
Hundreds more Credit Suisse Group AG bondholders have filed a lawsuit against Switzerland’s banking regulator after their assets worth around $1.7 billion were destroyed during the lender’s government-brokered purchase by UBS Group AG.
Pallas Partners, which filed the suit in a Swiss court on April 18, claimed that the Finma agency had no right to order the write-down and is seeking full compensation for its clients, which include 90 institutional investors and asset managers with $1.35 billion in so-called additional tier-1 bonds and 700 retail and family office clients with $300 million.
Pallas founder and managing partner Natasha Harrison said in a statement, “This was an abuse of process and the resolution procedure should not be used by Switzerland to enable UBS to take over Credit Suisse to the detriment of AT1 holders.”
According to the most recent allegations, investors representing more than a third of the $17 billion in AT1 bonds sold by Credit Suisse have wanted their money back. Quinn Emmanuel, a US law firm, filed a claim in Swiss court last month on behalf of more than 400 institutional investors who held around $4.5 billion in AT1s, and at least two more complaints have been filed.
AT1s are the lowest rung of bank debt, delivering generous profits in good times but absorbing the first blow when a bank runs into difficulties. They were created during the 2008 financial crisis. Even stockholders, who are generally the first domino to fall in such situations, benefited from the Swiss authorities’ takeover, whilst Credit Suisse’s AT1 holders received nothing. The move infuriated many bondholders. European officials rushed to reassure investors that the Swiss arrangement was unusual.
According to persons familiar with the price, claims on Credit Suisse’s AT1 notes have been quoted at approximately five cents on the euro in recent weeks.
Finma’s move, on the other hand, was covered under emergency legislation adopted the weekend of March 18-19, when the deal to save Credit Suisse was put together. Defenders of the write-down further point out that the small print on the bonds always said that a write-down to zero was possible.
Finma did not respond to a request for comment on the Pallas case. It previously stated its view on the write-down, stating that it was part of a takeover plan that was the least terrible alternative after Finma and the government rejected a Credit Suisse resolution or interim nationalization.
More lawsuits are expected this week as UBS rushes to complete the transaction. Some law firms believe the 30-day deadline for filing litigation is April 18, while others say it is just working days.
UBS Chairman Colm Kelleher has stated that the takeover will be completed this quarter, namely in May.
