The merger between Credit Suisse and UBS is creating waves across the banking sector. Rodrigo Olivares-Caminal, Of Counsel at Kepler-Karst and professor of Banking and Finance Law at Queen Mary University of London, comments for Bloomberg about this momentous event.

As part of the transaction, the Swiss regulator ordered the write-down of the riskiest notes (AT1) despite that shareholders have not been fully wiped-out, leaving bondholders shocked.

Rodrigo said that “[t]here are three elements that need to be balanced: the need to preserve financial stability, the pre-established hierarchical order of claims and any waiver of rights contained in the terms of the underlying documents”. He also added that “[h]owever, regulators have a lot of discretion to justify the unjustifiable.”

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