How the Credit Suisse rescue wiped out $17bn – and threatened the next crisis

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It marks the biggest loss suffered by bondholders of so-called AT1s since their inception

The emergency takeover of Credit Suisse by rival UBS over the weekend leaves few obvious winners, but holders of its riskiest bonds are certainly among the biggest losers.

In a move that startled markets, the Swiss financial regulator Finma ruled that investors in $17bn (£13.9bn) of Credit Suisse bonds, known as AT1s, will have their investment wiped out entirely as part of the shotgun marriage between the country’s two biggest banks.

On Sunday, Finma said: “The extraordinary government support will trigger a complete writedown of the nominal value of all AT1 shares of Credit Suisse in the amount of around SFr16bn (£14.1bn), and thus an increase in core capital.”

Yet the move raises questions about the hierarchy of investor claims, with Credit Suisse’s shareholders receiving $3.3bn as part of the deal, and risks sending the $275bn market for bank funding into chaos.

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How the Credit Suisse rescue wiped out $17bn – and threatened the next crisis

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