Singapore, 19 October 2025 – A major Singapore law firm is preparing to file claims against the Swiss government by year-end, seeking compensation on behalf of Asian bondholders who lost out when Credit Suisse’s Additional Tier 1 (AT1) bonds were written off during the bank’s 2023 rescue by UBS Group.
The case targets hundreds of investors across Japan, Hong Kong and Singapore, the law firm is representing about 560 bondholders in these jurisdictions. The losses stem from the decision by the Swiss Financial Market Supervisory Authority (FINMA) to write off approximately CHF 16.5 billion (~US$20 billion) of Credit Suisse AT1 bonds while preserving shareholder value ahead of bondholder claims — a sequence that drew regulatory and legal criticism.
Background of the Dispute
When Credit Suisse was rescued in March 2023, Switzerland’s regulator invoked emergency powers to wipe out the bank’s AT1 instruments, typically expected to absorb losses only after equity holders. Many investors argued the move lacked a clear legal basis and violated trust and fairness for bond-holders. A Swiss court in October 2025 ruled the regulators acted unlawfully when ordering the write-down, although no automatic compensation was mandated.
For Asian investors, the losses were especially acute. Many regional institutions and high-net-worth individuals held these high-yield instruments under the assumption of seniority and protection. The prospective legal action aims to invoke bilateral investment treaty protections between Switzerland and each of the affected jurisdictions, Singapore, Japan and Hong Kong, to seek restitution.
Scope and Legal Strategy
According to the law firm, claims will proceed in phases: first targeting Japanese bond-holders and subsequently incorporating Singapore and Hong Kong investors. The estimated losses amount to approximately US$300 million for the Asian cohort. Litigation-funding partner Omni Bridgeway Ltd. has agreed to cover legal fees.
The legal strategy hinges on triggering bilateral investment treaties (BITs) that Switzerland has with Singapore, Japan and Hong Kong. These treaties offer safeguards for “investments” against expropriation or unfair treatment by a host state. The bond-holders’ argument is that the Swiss regulatory move amounted to an unfair and uncompensated taking of their investment.
Regional & Market Implications
- The case signals to Asian investors that even sophisticated instruments like AT1 bonds are exposed to regulatory risk, including in jurisdictions considered stable.
- If successful, the action may open doors for other regional investors to pursue claims against sovereigns under investment treaties, shifting the contours of cross-border investor protection.
- For Switzerland, this adds pressure on its regulatory regime and raises questions about how investor claims, debt hierarchy and state intervention are handled in future crises.
- Asian financial institutions and sovereign-wealth investors may now reassess their holdings in debt instruments of foreign banks or states where regulatory risk is less transparent.
Outlook
The litigation timeline is likely to be extended, enforcement against a sovereign state under BITs often involves arbitration, treaty negotiation and diplomatic exchange. While the Swiss court ruling in October provided a favourable precedent, it did not guarantee compensation. The Asian claimants’ success will depend on treaty interpretation, damage assessments and enforcement mechanisms.
Asian investors, once comforted by Switzerland’s reputation for stability, now face a clearer reminder: regulatory risk can transcend borders. In the complex world of cross-border investment, treaty rights may now matter as much as credit analysis.
