A logo is pictured on the Credit Suisse bank in Geneva, Switzerland, March 15, 2023. REUTERS/Denis Balibouse
April 21 (Reuters) – Several lawsuits have been filed over the terms of last month's emergency deal to save Swiss lender Credit Suisse (CSGN.S) by selling it to its bigger rival UBS (UBSG.S).
The 3 billion Swiss franc ($3.4 billion) rescue, hammered out over a weekend during a bout of turmoil in the global banking sector, upended a long-established practice of giving bondholders priority over shareholders in a debt recovery.
Around 16 billion Swiss francs of Additional Tier 1 (AT1) Credit Suisse debt was written down to zero, in a shock to markets.
Law firms such as Quinn Emanuel Urquhart & Sullivan, Pallas Partners and Korein Tillery, a boutique law firm specializing in complex litigation, are among those who have spoken to prospective bondholder clients about bringing claims.
Shareholders are also nursing losses.
Here is a snapshot of legal action, by jurisdiction.
SWITZERLAND
- A group of investors representing more than 4.5 billion Swiss francs of AT1 bonds sued the Swiss regulator in one of the largest such bondholder disputes, their lawyers said on April 21. The case was filed in the Federal Administrative Court in St Gallen, north east Switzerland. The regulator, FINMA, declined to comment.
- The Federal Administrative Court says it is continuing to receive complaints and has "many more than four". But it has declined to name claimants or provide an ongoing tally of those lodged by bondholders or their lawyers.
UNITED STATES
- One of the first proposed U.S. class actions against Credit Suisse over alleged false or misleading statements pre-dates the rescue. In a case led by shareholder Braden Turner, investors alleged on March 16 that the bank failed to disclose it was suffering "significant" customer outflows and had material weaknesses in internal controls over financial reporting. Credit Suisse declined to comment.
- A string of similar proposed class actions have been filed.
SINGAPORE
- Credit Suisse investors in Singapore are also in talks to sue the Swiss government over the AT1 bond writedown on grounds it violated a free trade agreement, the Financial Times reported. The bondholders argue that the move breached protections against unfair state actions under the Singapore-European Free Trade Association signed with Switzerland in 2003, the newspaper said.
($1 = 0.8937 Swiss francs)
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