These obligations are causing a stir, even though the Federal Administrative Court, which rules at first instance, indicated in a judgment published Tuesday evening that the bank Credit Suisse itself has waived an appeal concerning part of these instruments that had been allocated to its employees as one of the components of their bonus.

On March 19, UBS agreed to buy its rival for 3 billion Swiss francs (an equivalent sum in euros) under pressure from the Swiss authorities to prevent its collapse.

To facilitate this emergency rescue, FINMA, the Swiss market regulator, had triggered a full amortization of the so-called AT1 (Additional Tier 1) bonds. Their value, amounting to 16 billion Swiss francs, was thus reduced to nothing.

These bonds include complex financial instruments put in place after the 2008 financial crisis with the aim of strengthening banks.

Finma's decision stunned investors, as bondholders normally come first in the bankruptcy order.

Law firms in support, investors have since mobilized to challenge this decision. So far, the Federal Administrative Court has received 230 complaints against the Swiss market surveillance authority, a spokesman for the court told AFP, confirming a press report. They come from some 2,500 people who came together to challenge Finma's decision.

The court does not provide any additional details as these are ongoing legal issues. He cannot therefore comment on the possible date of judgment.

Contacted by AFP, Finma did not comment, referring to its decision in March and the Federal Council's message, without commenting beyond that.

Credit Suisse waives a recourse

Legal remedies are multiplying. On Sunday, Swiss newspaper NZZ am Sonntag reported that a law firm in Japan is preparing a lawsuit and is trying to gather as many aggrieved creditors as possible to seek international arbitration proceedings against Switzerland.

And on Monday, the Financial Times revealed that employees also wanted to file a complaint against the policeman of the financial markets following the cancellation of bonuses related to this type of obligation.

Law firms Quinn Emanuel and Pallas have reportedly received several requests from senior bank executives, according to the British business daily. The amount relates to some $400 million in bonuses (€371 million) related to these bonds. Both firms already represent major investors who have come together to protest the decision.

The bank itself had filed an application with the Federal Administrative Court following a difference of interpretation concerning some of these financial instruments.

"From the point of view of the banking group, this decision did not concern the Contingent Capital Awards (CCAs) not issued by Credit Suisse Group Ltd. itself but awarded by other group companies to its employees as part of their remuneration," the administrative court said in a decision published on Tuesday evening, while specifying that FINMA had refuted this interpretation.

In a letter dated May 9, Credit Suisse finally informed the court "of its decision to refrain from resorting," the Swiss court said in a statement.

On Tuesday, the Swiss Finance Ministry announced that Credit Suisse will have to examine the possibility of returning bonuses paid to its executives since 2019.

The bank will have to report on this point to the Ministry of Finance and to the Swiss Financial Market Supervisory Authority.

At the beginning of April, the government demanded that all variable compensation of Credit Suisse's management team due until the end of 2022 be abolished. For the lower level, they will be reduced by 50%, and by 25% for managers at the third level.

© 2023 AFP