The decision, issued on October 1, 2025 (PDF in German), has sparked intense debate. As finews.com reported yesterday, the court annulled Finma’s March 19, 2023 order that wiped out all Additional Tier 1 (AT1) bonds of Credit Suisse, declaring it unlawful.

Overall, the positive aspects of this interim ruling outweigh the procedural uncertainties, as finews.com commented (article in German).

Less attention has been paid to the court’s detailed findings about the inner workings of those decisive hours: how the bank operated internally, how the authorities acted, and how UBS — the ultimate beneficiary — navigated its role. finews.com highlights the most revealing passages from the judgment.

1. Federal Council and FINMA acted beyond the law

The ruling reads, in large part, like a legal vote of no confidence in Switzerland’s crisis managers during the fateful March weekend of 2023.

The court found that Finma’s order to write off Credit Suisse’s AT1 instruments had no solid legal basis — neither in the bond documentation, nor in statutory law, nor in the Federal Council’s emergency decree: «It follows that Finma’s AT1 order of 19 March 2023 has neither a basis in the contract between Credit Suisse Group AG and the AT1 holders, nor in statutory law … nor in the Public Liquidity Backstop Emergency Ordinance … and must therefore be regarded as unlawful.»

The judges further concluded that the emergency decree itself — introduced by the Federal Council on 19 March 2023 to enable the AT1 write-down — was unconstitutional. The key Article 5a, inserted that evening at 8 p.m., which granted Finma the authority to order a full write-off, «exceeded the Federal Council’s constitutional powers.»

2. Finma shares responsibility for the structural flaws of the AT1 bonds

The court made clear that the flaws surrounding the AT1 write-down did not originate in March 2023 but years earlier, when Finma approved the bonds’ issuance terms. The first Credit Suisse AT1 instruments date back more than a decade.

The judges began by recalling the legal framework of Switzerland’s Capital Adequacy Ordinance (CAO). To qualify as Additional Tier 1 capital, an instrument’s contractual terms must include events that trigger a write-down — the so-called Point of Non-Viability (PONV).

The ordinance stipulates «that AT1 instruments must be written down upon the occurrence of a contractually defined trigger event, but at the latest when the Common Equity Tier 1 (CET1) ratio falls below 7 percent …». Such a write-down must occur «before public support is used or whenever Finma deems it necessary to prevent insolvency.»

This creates a broad legal framework: Finma may order a write-down whenever it considers it necessary to avert a bank’s failure.

Before issuance, however, the regulator is required to ensure that these conditions are properly reflected in the contractual documentation: «Prior to the issuance of the relevant AT1 instruments, Finma must in particular approve the write-down event defined in the contractual terms.»

That approval proved crucial — and problematic — in Credit Suisse’s case.

The version approved by Finma deviated from the ordinance’s legal model. The Credit Suisse prospectus defined the so-called «Viability Event Type B» as follows: «The Regulator has notified CSG that it has determined that a write-down … is, because customary measures to improve its capital adequacy are at the time inadequate or unfeasible, an essential requirement to prevent CSG from becoming insolvent, bankrupt or unable to pay its debts …»

By including the additional clause — «because customary measures … are inadequate or unfeasible» — Credit Suisse introduced a condition not foreseen by law, effectively raising the threshold for a write-down and limiting Finma’s discretion.

Such a restriction, the court noted, does not exist in the Capital Adequacy Ordinance, which allows FInma to act whenever it considers a write-down necessary to prevent insolvency — without requiring proof that all other options have failed.

The court summed up the issue succinctly: «It is undisputed that clause 7(a)(iii) of the AT1 terms does not comply with the requirements set out in the Capital Adequacy Ordinance, and that the definition of ‹Viability Event Type B› is narrower than that in Article 29(2)(a) of the former ordinance.»

In other words, Finma had approved prospectus language that imposed stricter conditions for a write-down than prescribed by the law — and later ordered a write-down that was not justified under those tighter terms.

3. Credit Suisse was blindsided by the AT1 decision

The ruling provides a revealing timeline of Credit Suisse’s final hours before its forced merger with UBS — and its last-minute efforts to dissuade Finma from triggering the write-down.

According to the court, internal emails show that on the afternoon of 19 March 2023, Credit Suisse urged Finma to hold back: «We strongly urge you to reconsider and abstain from any determination of the occurrence of a ‹Viability Event› under the AT1 instruments of CSG.»

The bank argued that it faced a liquidity crisis, not a capital shortfall. The merger with UBS, it said, was designed to restore «confidence and liquidity,» not to bolster capital adequacy.

Finma was unmoved. At 6:24 p.m., it informed the bank that it would order the write-down. Twenty minutes later, Credit Suisse formally requested a written order. At 10:01 p.m., Finma issued it — instructing the bank to write off the AT1 bonds and notify investors, which it did the following morning.

On 20 March, Credit Suisse shifted its attention to its Contingent Capital Awards (CCA) — bonus-linked instruments tied to the value of the AT1 bonds — seeking written confirmation that they were not affected by Finma’s order.

Three days later, FINMA issued a second order, explicitly stating that the CCAs were «covered by» the March 19 decision and therefore also worthless.

Credit Suisse requested interim relief only against this second order, not the main AT1 decision — a request it withdrew on 9 May 2023.

On Sunday evening, the bank fought the write-down; by Monday, it was negotiating exceptions for bonus instruments. The sequence suggests Credit Suisse was caught off guard by Finma’s decision.

Next page: UBS’s dual role in the proceedings – and how the court assessed Finance Minister Karin Keller-Sutter’s comments during the rescue.