"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. Tier 2 bonds will not be written down, FINMA said.
FINMA Director Urban Angehrn said that "a solution was found on Sunday to protect clients, the financial centre and the markets".
European regulators on Monday stepped in to say they would continue to impose losses on shareholders before bondholders - unlike the treatment of bondholders at Credit Suisse. In a bid to boost confidence among bondholders, UBS said on Wednesday it
would buy back
2.75 billion euros worth of debt it sold just days ago.
($1 = 0.9148 Swiss francs) (Reporting by John Revill, Editing by Friederike Heine and Dhara Ranasinghe)
Messaging: john.revill.thomsonreuters.com@reuters.net))