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Swiss Court Rules Credit Suisse’s AT1 Write-off as Unlawful
October 15, 2025
The Swiss court has ruled that the write-off of Credit Suisse’s (CS) AT1 bonds worth CHF 16.5bn ($20.5bn) as part of the bank’s 2023 bailout by UBS was unlawful, giving CS’ bondholders hope of recovering some losses and reigniting scrutiny of the government-led takeover. The Federal Administrative Court found that the decision by regulator FINMA lacked a proper legal basis and violated bondholders’ property rights; as such, an action that required a clear formal law that did not exist. The ruling can still be appealed to Switzerland’s top court, and both FINMA and the finance ministry said they are reviewing the decision. The outcome could force UBS to reinstate the AT1 bonds of CS or share the cost with the government. Legal experts expect the process to last several years, and even if bondholders prevail, repayments are likely to be well below the full CHF 16.5bn ($20.5bn), since the bonds’ market value had already plunged before Credit Suisse’s collapse. The 2023 write-off had shocked markets, as it broke with convention by giving shareholders $3.25bn in UBS stock while wiping out AT1 bondholders completely. Around 3,000 investors filed roughly 360 legal cases challenging the move, claiming expropriation without compensation. While the court’s decision only partially revokes FINMA’s decree and has not yet ruled on reversing the write-off, it represents a major step toward restoring investor confidence and could reshape how Swiss authorities handle future bank resolutions. UBS shares were down by 2.1% in yesterday’s trading session.
UBS’ AT1s traded with a negative bias, for instance its recently issued 7% Perp dropped by 0.8 points to 99.9, yielding 7.01%
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