Swiss pension funds have vowed to continue their legal battle to recover losses stemming from the write-down of Credit Suisse’s additional tier 1 (AT1) bonds, after the country’s financial regulator appealed a court ruling that found the measure unlawful.

Patrick Zuber, deputy chief executive officer of Pensionskasse SBB, the CHF19.5bn pension fund for the Swiss federal railways, told IPE the scheme is “committed to ensuring that FINMA’s decision is judged by a court”, citing its fiduciary duty to members.

He declined to provide further details on the ongoing proceedings.

Pensionskasse SBB lost around $1.6m from the write-down – a relatively modest sum compared with the CHF100m hit taken by Migros Pensionskasse, which has led the legal challenge against the Financial Market Supervisory Authority (FINMA).

Migros is awaiting a final decision from the Federal Supreme Court (Bundesgericht), following an appeal by FINMA earlier this month.

“The decision will then address the effects of the potentially unlawful write-down. The proceeding will take years,” said CEO Christoph Ryter.

The regulator appealed against a ruling by the Swiss Federal Administrative Court, which found the CHF16.5bn write-down of Credit Suisse’s AT1 instruments unlawful.

The court concluded that neither the “contingency event” – triggered when a bank’s CET1 ratio falls below 7% – nor the “viability event” – defined as the need for extraordinary public support – had occurred to justify the bonds’ cancellation.

According to the court, Credit Suisse was still adequately capitalised and met regulatory requirements at the time of the takeover by UBS in 2023.

The Federal Department of Finance, FINMA, and the Swiss National Bank had jointly crafted a rescue package for Credit Suisse that included the AT1 write-down, under emergency powers authorised by the Federal Council.

Several cantonal banks were also exposed. Zürcher Kantonalbank reportedly held a low double-digit million amount in Credit Suisse AT1s, while Fribourg Cantonal Bank lost CHF5m and Thurgauer Kantonalbank around CHF2m.

A spokesperson for Zürcher Kantonalbank said there is not yet a legally binding judgment on the AT1 issue, adding that “statements regarding a possible outcome of the pending proceedings and their possible consequences are currently speculative”.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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