What You Can and Can’t Criticize UBS For on Credit Suisse
Bleating about UBS shareholders not having a vote is academic. There’s no value in letting chaos continue.
Rescue time.
Source: Bloomberg
The Swiss authorities have forced unexpected hits on two vital sources of capital for the banking system. Holders of Credit Suisse Group AG’s so-called AT1 bonds just got wiped out in the bank’s arranged marriage with UBS Group AG. Shareholders in the buyer have got a massive, unwanted and risky deal. Time for the violins? Not so fast.
The decision by the Swiss banking regulator to write down the AT1 debt to zero while Credit Suisse’s shareholders get to pocket UBS’s takeover bid was a shock, but it doesn’t appear to be a cast-iron violation of the terms of the securities, as my Bloomberg Opinion colleague Shuli Ren argues. Investors have had a rapid lesson in reading the small print, and the market will be more discerning hereon.