2023-05-23 21:44:12
These obligations are causing a stir, even if the Federal Administrative Court, which rules at first instance, indicated in a judgment published Tuesday evening that the bank Credit Suisse itself has waived an appeal concerning part of these instruments which had been allocated to its employees as one of the components of their bonus.
On March 19, UBS agreed to buy its rival for 3 billion Swiss francs (an equivalent sum in euros) under pressure from the Swiss authorities in order to prevent its collapse.
To facilitate this emergency rescue, Finma, the Swiss market regulation authority, had triggered a complete amortization of the so-called AT1 (Additional Tier 1) bonds. Their value, amounting to 16 billion Swiss francs, was thus reduced to nothing.
These bonds include complex financial instruments put in place following the 2008 financial crisis with the aim of strengthening banks.
This decision by Finma had caused amazement among investors, bondholders normally arriving first in the order of repayment in the event of bankruptcy.
Law firms in support, investors have since mobilized to challenge this decision. For the time being, the federal administrative court has received 230 complaints once morest the Swiss market surveillance authority, a spokesperson for the court told AFP, confirming press information. They come from some 2,500 people who have come together to challenge Finma’s decision.
The court does not provide any further details as these are ongoing legal matters. He therefore cannot comment on the possible trial date.
Contacted by AFP, Finma did not comment, referring to its March decision as well as to the message from the Federal Council, without commenting further.
Credit Suisse waives recourse
Lawsuits are on the rise. On Sunday, the Swiss newspaper NZZ am Sonntag reported that a law firm in Japan is preparing a lawsuit and is trying to round up as many aggrieved creditors as possible to seek international arbitration proceedings once morest Switzerland.
And on Monday, the Financial Times revealed that employees also wanted to file a complaint once morest the financial market policeman following the cancellation of bonuses linked to this type of obligation.
Law firms Quinn Emanuel and Pallas have reportedly received several requests from senior bank executives, according to the British business daily. The amount relates to some 400 million dollars in bonuses (371 million euros) linked to these bonds. These two firms already represent major investors who have come together to protest once morest this decision.
The bank itself had filed a complaint with the Federal Administrative Court following a difference of interpretation concerning some of these financial instruments.
“From the perspective of the banking group, this decision did not concern the Contingent Capital Awards (CCAs) not issued by Credit Suisse Group SA itself but awarded by other group companies to its employees as part of their remuneration”, indicates the administrative court in a judgment published Tuesday evening, while specifying that Finma had refuted this interpretation.
In a letter dated May 9, Credit Suisse finally informed the court “of its decision to waive recourse”, said the Swiss justice in a press release.
On Tuesday, the Swiss Ministry of Finance announced that Credit Suisse will have to examine the possibility of returning bonuses paid to its leaders since 2019.
The bank will have to report on this point to the Ministry of Finance as well as to the Swiss Financial Market Supervisory Authority.
In early April, the government demanded that all variable pay for Credit Suisse’s management team due until the end of 2022 be scrapped. For the lower level, they will be reduced by 50%, and by 25% for the executives at the third level.
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