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AT1 Bonds from Credit Suisse: Investors May Be Able to Recover their Losses

Securities Lawyer Jonathan Kurta
By: Jonathan Kurta Author

UBS’s move to acquire Credit Suisse was good news for Credit Suisse shareholders, but bad news for AT1 bondholders. Under the new UBS deal, shares of the Additional Tier 1 (AT1) debt will be written down to zero–i.e., rendered worthless. UBS acquired Credit Suisse for nearly 60% less than it would have paid had the bank not been on the brink of collapse. AT1 bondholders will collectively lose an estimated $17.3 billion. Meanwhile, UBS is paying Credit Suisse shareholders $3.23 billion.

Traditionally, bondholders receive payments before shareholders. Banks do not have to pay AT1 bondholders, which may come as a surprise to some bondholders. This makes AT1 bonds attractive to banks since they do not count toward the bank’s liability. The Wall Street Journal reports that if AT1 bonds could not be wiped out, “the math for UBS shareholders didn’t work.”

How Do AT1 Bonds Work? 

AT 1 bonds come with plenty of risks with a limited upside.

  • AT1 bonds often come with complex terms, making them difficult for investors to fully understand.
  • Stock brokers and investment advisers may emphasize that these types of bonds come with particularly high yields, without mentioning the risk for losses.
  • AT1 bonds are perpetual, meaning they do not have a maturity date. They are supposed to pay out interest for the duration of their existence, but the bank may “call” them, or redeem them, typically after two to five years. Investors, however, do not have the power to redeem their bonds.
  • If the bank faces financial struggles, it can stop paying interest on AT1 bonds or reduce the payouts.

Securities Lawyer Jonathan Kurta
Written by: Jonathan Kurta

Jonathan Kurta is an accomplished securities attorney and a founding partner at Kurta Law.

Risks of AT1 Bonds

Stock brokers and investment advisers have an obligation to only recommend investments with an appropriate degree of risk. Credit Suisse has endured a long list of scandals and business setbacks in recent years, so financial professionals should have known there was a chance that investors would lose money they put into Credit Suisse AT1 bonds.

 If you lost money on an AT1 bond and have questions for a securities attorney about your legal options for recovery, contact our team today. (877) 600-0098 or

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Credit Suisse in the News

Investors should be aware of the following scandals:

  • Switzerland’s Federal Criminal Court said that Credit Suisse must pay $22 million in fines for failing to catch red flags of money laundering. A Credit Suisse employee allegedly helped a Bulgarian cocaine ring launder money, which arrived at the bank in “suitcases stuffed with cash,” according to the New York Times.
  • Credit Suisse endured major recent shake-ups in their upper management and the bank’s stock has fallen precipitously.
  • Concerns over the bank’s performance motivated wealthy clients to take their funds elsewhere, resulting in a 40% decline in deposits.
  • In 2021, an investment firm called Archegos Capital Management defaulted on margin calls to banks including Credit Suisse. Archegos had overconcentrated investments in several sectors. Because it could not meet the margin calls, Credit Suisse lost $4.7 billion.
  • Greensill Capital offered a complex financial instrument called “supply chain financing.” Credit Suisse invested $10 billion in Greensill funds. When Greensill collapsed in 2021, investors questioned if the bank had taken on too much risk.
  • A New York judge ordered Credit Suisse to pay $22.6 million to investors who lost money on debt securities that were meant to fund a tuna fishing enterprise in Mozambique. Credit Suisse bankers who set up the bonds pled guilty to taking kickbacks.

Your Financial Professional’s Obligations

Under Regulation Best Interest, your brokerage firm or advisory firm also has an obligation to perform their due diligence and understand the investments they offer. They should also disclose any conflicts of interest, as well as any investments that may have similar benefits with fewer risks. AT1 bonds were high-risk investments, and investors who suffered losses should speak with a securities attorney and determine if they have a case for FINRA arbitration.