Three months have gone by since the unprecedented write-down of Credit Suisse AT1 bonds, wiping out over billions of bonds as part of the UBS rescue takeover. The move by FINMA the Swiss regulator has been decried by investors and indeed regulators all over the world and Asia has felt the impact no less than anywhere else in the world. Indeed, investors from the far east form a substantial part of the exposure. Withers is leading Singapore’s largest contingent of affected bondholders with over 180 investors in a multi-million dollar claim. It is reported that Japanese investors suffered an aggregate loss of about USD 1 billion from the crisis. The actual impact of the fallout on asian investors remain to be seen. Nevertheless, three months on, the dust has settled somewhat and perhaps some new perspectives can be gleaned.

There is a zen belief that putting some space between oneself and the problem brings clarity. And so perhaps in many ways, the time that has transpired since the collapse of Credit Suisse has brought a little greater clarity into the matrix of options available to investors.

While many investors from across the world have chosen to pursue an administrative action against FINMA before the Swiss Courts by the prescribed deadline of 3 May 2023, many other investors in Asia have decided not to enter the fray. FINMA did not act on its own but was sanctioned by emergency laws passed by Swiss government on 19 March to write down AT1 bonds. To the extent where the action is premised on the Swiss Constitution, there are questions as to what extent investors from the Far East can avail themselves of any arguments arising from the Constitution. Three months on, it remains to be seen how the administrative action would result in compensation to investors. The action, even if successful, could mean that the decision by FINMA to write down the AT1 bonds contradicts Swiss law and therefore needs to be reversed. Given however that any capital allocation was made pursuant to UBS’ acquisition of Credit Suisse, FINMA would not appear to have the monies from the written down bonds to return to the investors.