Withers Starts Singapore-Based Credit Suisse Lawsuit

Tom Burroughes Group Editor 15 May 2023

Withers Starts Singapore-Based Credit Suisse Lawsuit

Another law firm – Withers – has entered the fray of filing a class-action lawsuit brought as a result of the write-down in billions of Swiss francs' worth of AT1 debt issued by Credit Suisse.

Late last week, Withers announced that it is acting in Singapore for more than 100 holders of Additional Tier 1 bonds in Credit Suisse. The suit comprises more than S$100 million ($74.7 million). The firm is suing FINMA, the Swiss regulator, a spokesperson for Withers confirmed to this news service.

When UBS agreed to take over Credit Suisse at the behest of Swiss federal authorities as the latter bank’s share price continued to crumble, the SFr3 billion transaction included the writedown to SFr16 billion ($17.8 billion) of AT1 debt. These high-risk bonds are forms of buffer capital that European banks began to issue after the 2008/09 financial crisis. The write-down has prompted anger, not least because bondholders appear to have been treated less favourably than equity holders, which reverses the usual seniority. (See here for another story about an international lawsuit from investors in a number of countries.)

Withers said its lawsuit, one of the “largest group actions to come from Asia arising from the bank's collapse,” is being led by Singapore-based partner Shaun Leong, with investors including high net worth individuals, accredited investors and corporate investment companies based across Asia.

In a 23 March explanation of the AT1 write-down, FINMA, said on its website: “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.”

“As Credit Suisse was granted 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,” FINMA said. 

Withers said its team will draw on investment treaty protection rights arising from Singapore's free trade agreement with Switzerland.

"The decision to target the investments of AT1 bondholders, whilst taking steps to protect shareholders, goes against legitimate expectations of investors and the spirit of the international free trade agreement,” Leong said in a statement. “We are confident that our clients are in a strong position to assert their rights and that we can reach a good solution which gives reassurance to international investors in Swiss institutions. We welcome any other bondholders that are concerned about their losses to make contact about their options."

The international law firm said it has held town hall events in Singapore, London and New York to inform bondholders of their rights and of the potential routes available to recoup their losses. The firm's UK and US teams are also working with clients to assess their position and to advise on potential remedies for lost investments in Credit Suisse, it said.

FINMA’s explanation in March said: “AT1 instruments in Switzerland are designed in such a way that they are written down or converted into Common Equity Tier 1 capital before the equity capital of the bank concerned is completely used up or written down. The instruments publicly issued by large banks are mainly held by institutional investors due to their risk profile and large denominations.”

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