European supervisors tried to stop a rout in the market for convertible bank bonds on Monday, saying owners of this type of debt would only suffer losses after shareholders have been wiped out - unlike what happened at Credit Suisse .
Regulators in the European Union and Britain were reacting to a decisions by Swiss authorities to write off Credit Suisse's Additional Tier 1 bonds even as stockholders received shares in UBSThe EU regulators - the European Central Bank, the European Banking Authority and the Single Resolution Board - said they would continue to impose losses on shareholders before bondholders.
The comments helped the price of bank bonds cut losses and were echoed by the Bank of England shortly after. All institutions welcomed, however, "the comprehensive set of actions taken yesterday by the Swiss authorities" to save Credit Suisse, using the same phrase in their separate statements.on Sunday, UBS Group AG will pay 3 billion Swiss francs for 167-year-old Credit Suisse Group AG and assume up to $5.4 billion in losses.
AT1 became popular with banks and market participants in the past decade as lenders looked for ways of building up capital to meet supervisors' requirements without issuing equity.
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