Investors in CS bonds apparently want to take the Swiss state to US court. China is flooding Europe with cheap electric cars – now the EU is fighting back

Switzerland could face a lawsuit in the US over the CS emergency rescue. Because Credit Suisse’s so-called AT1 bonds have been declared worthless, a group of international bond investors plan to sue Switzerland in a US court for expropriation, the Financial Times reported on Friday evening.

The case is being put together by the international law firm Quinn Emanuel, according to the report in the British business newspaper, which names people familiar with the case. The lawsuit could be filed by the end of the year, but it is not yet certain whether it will actually come to fruition. The bondholders would essentially be seeking compensation for the “destruction” of their property rights, the report continues.

The Federal Ministry of Finance did not want to comment on the article on Friday evening at the request of the AWP news agency. Quinn Emanuel also declined to comment on the report to the Financial Times.

Quinn Emanuel has already filed complaints on behalf of numerous bondholders against Finma’s order to cancel the AT1 bonds at the Federal Administrative Court in St. Gallen. In August, the Federal Administrative Court estimated the total number of complainants regarding the AT1 bonds at more than 3,000.

In March 2023, Finma ordered Credit Suisse to fully write down and cancel high-yield AT1 bonds with a total value of around 16 billion francs as part of the emergency takeover of the ailing bank by UBS.

AT1 bonds were created after the 2008 banking crisis. The debt securities can be converted into equity and written off if the financial institution gets into trouble. Finma had explained that with the help of the public sector, an event had occurred that justified such an approach. (sda/awp)