Credit Suisse wrote its AT1 bonds to zero — and left shareholders with something

Credit Suisse spent years losing the market's confidence before it ever reached the weekend of its rescue: the Archegos collapse and the Greensill fund failure cost it billions, a string of leadership changes and compliance scandals followed, and by early 2023 clients were pulling deposits faster than the bank could reassure them. That slow bleed of trust, not a single event, was the decision that put the bank in a position where its own AT1 bonds' fine print could be invoked at all.

Credit Suisse had raised billions in Additional Tier 1 bonds — contingent-convertible instruments, or 'CoCos', built so a troubled bank could absorb losses by writing them down before touching shareholders. On 19 March 2023, as part of the Swiss-brokered emergency takeover by UBS, FINMA ordered about CHF 16.5 billion (roughly $17 billion) of those bonds written down to zero. Equity holders, who normally rank behind bondholders, still received UBS shares worth a fraction of the company's former value — a reversal the bonds' own contracts had never suggested.

The reversal shocked credit markets worldwide: it was the largest loss ever taken in the roughly $275 billion global AT1 market, and banks' AT1 bonds elsewhere were repriced within days as investors realised the instruments could be wiped out even while equity survived. About 3,000 bondholders filed more than 360 lawsuits.

In October 2025, Switzerland's Federal Administrative Court ruled the write-down unlawful, finding Credit Suisse was adequately capitalized at the time and that neither trigger FINMA cited — a formal non-viability notification, or state aid meant to fix a capital shortfall — had actually been satisfied. FINMA said it would appeal.