A Swiss CDS Story
Summary
- The dramatic "takeover" of Credit Suisse by UBS has highlighted Switzerland's rather distinctive approach to bank capital.
- Documentation for Credit Suisse's Sfr16bn AT1 bonds - now worth zero - appear to allow a full write-down of the instruments without shareholders absorbing complete losses.
- European AT1 debt typically do not include such provisions - the Swiss government reinforced the decision by introducing emergency legislation empowering FINMA to write down AT1.
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