More than two years after the "shotgun wedding" between UBS and crisis-hit Credit Suisse, those who claim they lost out from the emergency takeover are trying to make legal claims.

A group of Credit Suisse holders of additional Tier 1 bonds across Asia are being urged to join a pending class action lawsuit against the Swiss federal government. These bonds are a hybrid debt structure introduced for European banks after the 2008 financial crash.

When Credit Suisse was bought in March 2023 by UBS at the behest of the Swiss authorities in an emergency transaction, holders of the “AT1” bonds were wiped out. 

According to a statement issued by those organising the lawsuit, the total value of AT1 bonds across all relevant jurisdictions adds up to more than $5 billion.

The ICSID investor state treaty arbitration against Switzerland will be led by global law firm HFW, which has been instructed by Credit Suisse AT1 bondholders to formally start proceedings, a statement from HFW said yesterday. 

The arbitration, which will be heard at the International Centre for Settlement of Investment Disputes (ICSID) headquartered in Washington DC, concerns claims based on Switzerland's alleged breaches of its obligations under international law, in particular treaty obligations owed under relevant investment treaties.

AT1 bondholders from Singapore, Hong Kong, the United Arab Emirates, China, Japan, the Republic of Korea, Kuwait, Oman, The Philippines, Qatar, and Saudi Arabia are also eligible to join the class action, as a product of these jurisdictions having bilateral investment treaties with Switzerland, the statement said. 

The statement said that claims must be filed by April 2026 because of a three-year statute of limitations on actions against the Swiss state. Proceedings are anticipated to span three to five years.

Third-party litigation funding can be arranged for this class action. Under such an agreement, bondholders would not be required to cover legal costs directly; however, funders would be entitled to a portion of any compensation awarded – typically around 25 per cent.

When the AT1 bondholders were hit, a number of legal claims were reported. A total of $17 billion of AT1 bonds were written down in total. See a report in May 2023 about lawsuits and the Credit Suisse case.

"We have already gathered a substantial group of some of the largest Credit Suisse AT1 bondholders in Singapore, with an approximate aggregate claim sum accounting for interest and coupon rates at over $80 million,” Shaun Leong, partner, HFW, said. 

“We can expect Switzerland to claim a three-year time bar. As the write down happened in April 2023, we are a few months away from April 2026 which is when we can expect Switzerland to argue that any claims that are not formally launched would have expired by then, even though we would argue that is inapplicable under international law,” he added.