Credit Suisse AG staff are preparing to sue the Swiss financial regulator over $400 million of bonuses that were canceled after the troubled lender’s rescue by UBS Group AG, the Financial Times reported on Monday.
Quinn Emanuel and Pallas, law firms which are already suing Swiss regulator Finma on behalf of investors who owned AT1 bonds, have received multiple requests from senior managers at Credit Suisse to take legal action on their behalf, the report said.
Credit Suisse declined to comment, while Law firms Quinn Emanuel, Pallas and Finma did not immediately respond to Reuters’ request for comment.
As a part of the takeover in March, the Swiss regulator ordered 16 billion Swiss francs ($18.00 billion) of the lender’s Additional Tier 1 debt to be written down to zero, while shareholders received some compensation.
Following this, Switzerland’s Federal Council instructed Credit Suisse to cancel or reduce all outstanding bonus payments for the top three levels of management and examine whether those already paid can be recovered.
Under Swiss banking law, the Federal Council can impose bonus-related measures on a systemically important bank if it received state aid from federal funds.
Additional Tier 1 bonds, or AT1s, are issued by banks to help them make up the capital buffers which regulators require them to hold. They can be converted into equity but until they are, they do not dilute a lender’s share capital.
($1 = 0.8889 Swiss francs)
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