On Mar. 19, 2023, Credit Suisse, a global investment bank and financial services firm based in Switzerland, announced its merger with UBS, a global firm providing financial services in over 50 countries.
This merger resulted in the writing off to zero of $17.2 billion Credit Suisse contingent convertible bonds, also known as CoCos. While this decision protects confidence of the Swiss Banking sector and Credit Suisse, it opens questions for the investors in Credit Suisse 7.500% Perpetual Corp and other CoCo bond offerings.
Fishman Haygood is exploring potential securities claims involving broker dealers who may have improperly recommended the Credit Suisse Perpetual Additional Tier 1 Securities/AT1 Bonds and other Credit Suisse CoCo bond offerings to investors. Investors may be able to pursue FINRA Arbitration Claims against the broker dealers/investment advisors who marketed the bonds to them.
What are Additional Tier 1 (AT1) Bonds?
Additional Tier 1 (AT1) bonds or CoCo bonds are a cross between a stock and a bond. After the bailouts of 2008, these bonds were designed to help banks raise capital and meet regulations and have the traits of both equity and debt instruments. As such, they are part of a bank’s Tier 1 capital, which reflects the bank’s financial strength and its ability to absorb losses.
However, since AT1 bonds are “contingent convertible,” this means that they can be converted into equity considering certain events. A triggering event might be regulatory or financial in nature, including a bank’s declining capital adequacy ratio.
These bonds are also perpetual, which means that they do not have a maturity date and can remain outstanding indefinitely, unless the issuing institution calls them or converts them into equity.
What risks are associated with the Credit Suisse AT1 Bonds?
While investors receive a higher yield with AT1 bonds, they do so at higher risk because of their contingent convertible nature. Many investors purchased these investments unaware of this risk.
A trigger event, like the merger of Credit Suisse with UBS, may result in contingent capital being converted into equity and written down, which might significantly affect the bonds’ value.
Have you invested in one of the AT1 Bonds issued by Credit Suisse Group AG listed below?
- 9.750% Perpetual Tier 1 Contingent Write-Down Capital Notes
- 4.500% Perpetual Tier 1 Contingent Write-Down Capital Notes
- 5.250% Perpetual Tier 1 Contingent Write-Down Capital Notes
- 5.100% Perpetual Tier 1 Contingent Write-Down Capital Notes
- 6.375% Perpetual Tier 1 Contingent Write-Down Capital Notes
- 7.250% Perpetual Tier 1 Contingent Write-Down Capital Notes
- 7.500% Perpetual Tier 1 Contingent Write-Down Capital Notes
- 6.250% Tier 1 Capital Notes
- 7.500% Tier 1 Capital Notes
These Perpetual Additional Tier 1 Securities/AT1 Bonds are believed to have been sold from 2013 to 2022. Many were sold to investors through a network of financial institutions and/or broker-dealers, including some of the following:
- ANZ Securities
- BB&T Capital Markets
- BMO Capital Markets
- BNY Mellon Capital Markets, LLC
- BofA Merrill Lynch
- Capital One Securities, Inc.
- Citizens Bank
- Credit Suisse Securities
- Danske Bank
- Deutsche Bank Securities
- Fifth Third Securities
- Lloyds Securities
- Morgan Stanley
- nabSecurities, LLC
- NatWest Markets
- Rabo Securities
- RBC Capital Markets
- Regions Securities
- Standard Chartered Bank
- TD Securities
- Truist Securities, Inc. / SunTrust Robinson Humphrey
- US Bancorp
- VTB Capital
- Wells Fargo Securities
We can help.
Fishman Haygood’s team of investment fraud lawyers represent investors who have suffered investment losses in claims against their brokers or financial advisors and the firms employing/supervising them relating to claims of fraudulent activity and financial schemes.
If you believe that you may have suffered financial losses due to these AT1 bonds, we may be able to help. Please contact us to discuss your potential claim.