Drew & Napier to sue Switzerland over Asia losses on AT1s

ONE of Singapore’s biggest law firms is set to file claims against the Swiss government by the end of the year, seeking compensation for hundreds of Asian bondholders of Credit Suisse Additional Tier-1 (AT1) debt that was wiped out in 2023.

Drew & Napier plans to go ahead with so-called investment treaty claims for Japanese bondholders first, followed by Hong Kong and Singapore investors, according to a director at the firm that’s representing about 560 bondholders from the three jurisdictions.

A court decision in Switzerland that the writedown of the Credit Suisse AT1 bonds was unlawful is the “first step in righting the wrong done to our clients”, said Mahesh Rai, who is working on the case that will seek to recover losses amounting to about US$300 million from the Swiss government.

Switzerland’s finance ministry declined to comment, in response to a query from Bloomberg News.

The Swiss Federal Administrative Court this month sided with complainants who had argued that a March 2023 decree to write down 16.5 billion Swiss francs (S$26.9 billion) of the AT1 bonds – under a government-brokered rescue of Credit Suisse by UBS Group – was unlawful and should be revoked.

Still, investors’ hopes will be tempered by how long the legal process will take, and whether any payout is ultimately likely. The complete writedown of the AT1 bonds had caused a furor, given that typically shareholders absorb losses before bondholders.

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Under bilateral investment treaties, Drew & Napier had to send trigger letters to the Swiss government, which it did in December 2024 and May this year. The firm is now starting the claim, since the treaties require the parties to negotiate for a six-month period after the issuance of the letters.

Their action is based on treaties that Switzerland has had with Singapore, Japan and Hong Kong for decades. These treaties offer protections to individuals and companies carrying out investments, including safeguards against the expropriation of their investments and unfair treatment by the governments.

Rai said the firm is “positive about the prospect of success” and is still signing on affected bondholders. Litigation-funding firm Omni Bridgeway has agreed to pay the investors’ legal fees. BLOOMBERG