
On 19 March 2023, the two (2) largest banks in Switzerland, Credit Suisse Group AG (“Credit Suisse”) and UBS Group AG (“UBS”), entered into a merger agreement (the “Merger”) further to the intervention of the Swiss Federal Department of Finance, the Swiss National Bank (the “SNB”), and the Swiss Financial Market Supervisory Authority (“FINMA”).
As part of the intervention, the SNB indicated that the Merger would trigger a complete write-down of 16 billion Swiss francs ($17.5 billion) worth of Credit Suisse’s Additional Tier 1 (“AT-1”) bonds. This meant that investors in the instrument would rank lower than shareholders of Credit Suisse, as they will receive no compensation upon the implementation of the Merger, while shareholders of the bank will receive UBS shares as compensation for the surrender of their shares in the bank.
In light of recent events, this article examines the global regulatory framework relevant to AT-1 instruments, the implications of write-downs, and draws some lessons for Nigeria.
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