(Reuters) -Lawsuits have been filed over the terms of last month’s emergency deal to save Swiss lender Credit Suisse by selling it to its bigger rival UBS.
The 3 billion Swiss franc ($3.4 billion) rescue, hammered out over a weekend during a bout of turmoil in the global banking sector, upended a long-established practice of giving bondholders priority over shareholders in a debt recovery.
Around 16 billion Swiss francs of Additional Tier 1 (AT1) Credit Suisse debt was written down to zero, in a shock to markets.
Law firms such as Quinn Emanuel Urquhart & Sullivan, Pallas Partners and Korein Tillery, a boutique law firm specializing in complex litigation, are among those who have spoken to prospective bondholder clients about bringing claims.
Shareholders are also nursing losses.
Here is a snapshot of legal action, by jurisdiction.
SWITZERLAND
* A group of investors representing more than 4.5 billionSwiss francs of AT1 bonds sued the Swiss regulator in one of thelargest such bondholder disputes, their lawyers said on April21. The case was filed in the Federal Administrative Court in StGallen, north east Switzerland. The regulator, FINMA, declinedto comment. * The Federal Administrative Court says it is continuing toreceive complaints and has “many more than four”. But it hasdeclined to name claimants or provide an ongoing tally of thoselodged by bondholders or their lawyers.
UNITED STATES
* One of the first proposed U.S. class actions againstCredit Suisse over alleged false or misleading statementspre-dates the rescue. In a case led by shareholder BradenTurner, investors alleged on March 16 that the bank failed todisclose it was suffering “significant” customer outflows andhad material weaknesses in internal controls over financialreporting. Credit Suisse declined to comment. * A string of similar proposed class actions have been filedon behalf of shareholders. * U.S. AT1 bondholders are also suing. A proposed classaction was filed in the district court of New Jersey on April 21against Credit Suisse and five senior managers on behalf ofinvestors who bought AT1 bonds and shares in the U.S. betweenFeb. 18, 2021 and March 20, 2023. The case seeks to recoverdamages caused by Credit Suisse’s alleged violations of federalsecurities laws for failing to disclose customer outflows andoverstating its financial health.
SINGAPORE
* Credit Suisse investors in Singapore are also in talks tosue the Swiss government over the AT1 bond writedown on groundsit violated a free trade agreement, the Financial Timesreported. The bondholders argue that the move breachedprotections against unfair state actions under theSingapore-European Free Trade Association signed withSwitzerland in 2003, the newspaper said.
($1 = 0.8937 Swiss francs)
(Reporting by Kirstin Ridley in London, John Revill in Zurich and Jonathan Stempel in New York; Editing by Alexander Smith and Josie Kao)