Migros sues Finma

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The urgent sale of Credit Suisse also affected Migros. Isabelle Zimmermann, CFO of the orange giant, said at the balance sheet press conference at the end of March that it had incurred a loss of 110 million francs.

Most of this loss, approximately CHF 100 million, is due to the write-off from Credit Suisse of AT1 bonds (called CoCo bonds), which were all wiped out when they were taken over by UBS. A loss of around 100 million CHF is expected. The remaining 10 million loss was due to the drop in the price of Credit Suisse shares.

Although it does not affect the balance sheet total of 100 million Migros, the retail giant does not accept this. Therefore, on April 18, Migros, together with Swiss and international investors holding more than 4.5 billion francs in AT1 bonds, applied to the Federal Administrative Court against the decision of the Financial Market Authority (Finma). Tages-Anzeiger”.

The plaintiffs are represented by the commercial law firm Quinn Emanuel Urquhart & Sullivan, which has a Zurich branch and brought together an international team of lawyers for this case. Reason: Finma’s interference with the complainants’ property rights is unlawful as it violates the principle of proportionality and good faith. This is equivalent to expropriation and therefore must be compensated.

What is legal and what is not?

Finma may refer to the fact that in special cases a copycat is provided and therefore legal (see graphic in the footage). This applies, for example, when bankruptcy is imminent or government intervention is necessary.

However, plaintiffs question whether it is necessary to devalue the bonds, especially since Credit Suisse meets regulatory capital requirements. They also want to know why, four days before the CS emergency sale, Finma and the Central Bank are still receiving signals of confidence regarding their capitalization, and on top of that, many investors bought CS Coco Bonds. From the creditors’ perspective, more moderate alternatives might exist, such as the suspension or partial write-off of interest payments on the Coco Bonds.

Quinn Emanuel’s case is one of the other cases pending in the Federal Administrative Court. Other cases are already being prepared, for example in Singapore or the USA.

Source :Blick