Drew & Napier to file claims against Swiss government over Credit Suisse AT1 bond losses

One of Singapore’s largest law firms, Drew & Napier, is reportedly preparing to launch legal claims against the Swiss government by the end of 2025, seeking compensation for hundreds of Asian investors affected by the 2023 Credit Suisse AT1 bond writedown, according to Bloomberg.

The firm’s director Mahesh Rai said Drew & Napier would first represent Japanese bondholders, followed by investors from Hong Kong and Singapore.

In total, the firm is acting for about 560 bondholders across the three markets, whose combined losses are estimated at US$300 million (S$389 million).

Additional Tier 1 (AT1) bonds are high-risk instruments issued by banks to strengthen their capital buffers. Designed to absorb losses during financial distress, they can be written down or converted into equity.

The Credit Suisse case became controversial in 2023 when Swiss regulators allegedly prioritised shareholder protection over bondholder rights.

At the time, FINMA said the writedown decision was based in part on the Federal Council’s Emergency Ordinance.

The measure formed part of a broader package to stabilise Credit Suisse through its merger with UBS Group AG, for which extraordinary state support was required.

FINMA Chief Executive Urban Angehrn said then that “a solution could be found to protect clients, the financial centre and the markets. In this context, it is important that CS’s banking business continues to function smoothly and without interruption. That is now the case.”

The controversy resurfaced earlier this month when the Swiss Federal Administrative Court ruled that the SFr16.5 billion (S$26.7 billion) AT1 bond writedown implemented during the UBS rescue was unlawful and should be revoked.

Rai described the court’s decision as “the first step in righting the wrong done to our clients”, adding that the firm remained “positive about the prospect of success” and continued to register affected investors.

Both the Swiss Federal Department of Finance and FINMA declined to comment when contacted by Bloomberg News.

In a statement on 15 October, FINMA said it will appeal the court’s decision to the Swiss Federal Supreme Court.

The court’s ruling followed complaints from about 3,000 investors across 360 proceedings, who argued that the March 2023 emergency decree authorising the writedown lacked a valid legal basis.

The court annulled FINMA’s order but has yet to decide whether the bonds will be reinstated.

The original writedown sparked global outrage, as AT1 bondholders were wiped out before shareholders, reversing the conventional capital hierarchy.

Under bilateral investment treaties between Switzerland and several Asian jurisdictions, Drew & Napier issued formal “trigger letters” to the Swiss government in December 2024 and May 2025.

These treaties provide a six-month negotiation period before claims can proceed and protect investors from unfair or expropriatory actions by foreign governments.

The firm’s upcoming case will argue that Switzerland’s actions amounted to unlawful expropriation and violated the fair and equitable treatment provisions under these treaties.

The proceedings are being financed by litigation funder Omni Bridgeway Ltd, enabling investors to pursue claims without upfront legal costs.

According to Drew & Napier, about 300 Singaporean investors are among the claimants, with losses amounting to roughly US$250 million (S$324 million).

The firm plans to expand its filings once the initial Japanese investor claims have been submitted.

Although the Swiss court’s decision has given investors fresh optimism, analysts caution that the legal process may be protracted.

Any potential compensation will depend on the outcome of Switzerland’s appeal and subsequent international arbitration.

If successful, the case could set an important precedent for cross-border investor protection, particularly in the context of state-backed financial interventions and the exercise of emergency regulatory powers.