Pacific Investment Management Co. considered. the participation of hundreds of investors in challenging the Swiss regulator’s decision to write off about $17 billion in Credit Suisse Group AG bonds following the takeover of the bank by UBS Group AG.
PIMCO, which filed a lawsuit against Finma to meet an early May deadline for those submissions, has yet to join any bondholder groups, according to a person familiar with the situation. (Editor’s note: PIMCO is a subsidiary of Allianz).
The company is evaluating whether to pursue legal action to recover some of Credit Suisse’s $800 million so-called Additional Tier 1 bonds, according to people familiar with the matter. Those bonds were written down to zero after the acquisition and the Newport Beach, California-based asset manager is one of the largest holders of the bonds.
Credit Suisse Bondholders Lose $1.7B in UBS Deal File Lawsuits
PIMCO, which runs one of the world’s largest actively managed bond funds, also held nearly $3 billion in senior bank bonds at Credit Suisse before the acquisition, Bloomberg previously reported .
The bondholders argued that the write-off was an unfair and unfair move that put shareholders ahead of bondholders. Defenders of Finma’s decision point out that the risk of a writedown is placed in the documents of the bonds.
The Swiss Federal Administrative Court said it had received about 230 appeals, involving nearly 2,500 claimants, against the March 19 writ.
Law firm Pallas Partners, which filed the lawsuit in April, is seeking full compensation for its clients, which as of early May included 90 institutional investors and asset managers with $1.35 billion in AT1 bonds, as well as 700 retail and family office clients accounting for about $300 million.
Quinn Emanuel Urquhart & Sullivan filed in April and now has more than 1,000 clients, including institutional investors, with about $6 billion in bonds. Apart from this, at least three other complaints have been filed.
Earlier this month, Credit Suisse withdrew an appeal to write down its AT1 bonds. The bank argued that the elimination of junior debt should not have been applied to the so-called contingent capital awards made by some bankers, because they were not issued by the lender itself “but instead given to other companies in the group of their employee.”
–With assistance from Allison McNeely.
Photo: A PIMCO advertisement is displayed on a building in Hong Kong. Photo credit: Brent Lewin/Bloomberg
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