By Adria Calatayud
A Swiss court ruled that the country lacked legal basis in its move to wipe out more than $17 billion of Credit Suisse Group bonds as part of the bank's rescue takeover by UBS Group.
Switzerland's Federal Administrative Court said Tuesday that it revoked a decree issued by the country's financial regulator, Finma, in March 2023 in which Credit Suisse was ordered to write off so-called Additional Tier 1, or AT1, bonds. It said it hasn't yet decided on whether to reverse the writeoff of the bonds.
Following the regulator's instructions, Credit Suisse wrote off its AT1 bonds with a nominal value of 16.5 billion Swiss francs--equivalent to $17.8 billion at the time and $20.5 billion at current exchange rate--the court said.
The decision was a key element of the deal engineered by Swiss authorities to lift Credit Suisse out of a crisis of confidence through an acquisition by cross-town rival UBS, and also one of its most controversial, with investors and market watchers divided on whether it was justified.
About 3,000 bondholders filed complaints with the court against the decision, the court said. The complainants requested a revocation of the decree and a reversal of the write-off, the court said. Finma and UBS challenged the complainants' right to appeal and argued the conditions for the AT1 write-off were met, the court added.
Finma said it acknowledged the Federal Administrative Court's partial decision and that it would analyze the ruling.
UBS declined to comment.
The court said it confirmed the complainants' right to appeal and revoked the decree, but that it hadn't yet decided on their request for a reversal.
The court considered that the bondholders' property rights were seriously interfered with and that no formal legal basis such a move would have required existed, it said.
The decision can be appealed at Switzerland's Federal Supreme Court, the Federal Administrative Court said.
Write to Adria Calatayud at adria.calatayud@wsj.com
Corrections & Amplifications
This was corrected at 11:10 a.m. ET. The original version misstated that Finma said it accepted the Federal Administrative Court's partial decision. Finma said it acknowledged the Federal Administrative Court's partial decision.
(END) Dow Jones Newswires
October 14, 2025 10:50 ET (14:50 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.