A Swiss court has ruled that Credit Suisse shareholders will not be compensated for losses incurred during the bank’s forced sale to UBS in March 2023, reported RTS. The Federal Supreme Court dismissed a claim brought by two small investors who had purchased nearly CHF 85,000 ($100,000) worth of Credit Suisse shares just days before the government-engineered rescue.
The sale saw UBS acquire Credit Suisse for CHF 3 billion—about 94% below its book value of CHF 54 billion—under emergency legislation. Shareholders, stripped of voting rights by the terms of the deal, were not consulted. The plaintiffs argued that Swiss government had misled the public about the bank’s condition in order to avoid sparking a bank run. They claimed government officials had falsely suggested that Credit Suisse was stabilising, only to announce its absorption by UBS shortly afterwards. The couple later sold their holdings at a steep loss and demanded CHF 55,000 in compensation from the government.
The government denied wrongdoing. Its legal representatives argued that the decision to invest in Credit Suisse was made independently by the plaintiffs, and that the government cannot act as an insurer against stock-market losses. The court decided that that the Federal Council had acted lawfully under emergency powers and bore no responsibility for investor outcomes.
The ruling is limited to this case, yet it may set a precedent for other disgruntled investors. While most shareholders have directed legal action at UBS or FINMA, Switzerland’s financial regulator, a small number—like the plaintiffs in this case—are pursuing claims against the federal government. The statute of limitations for such claims expires next year, though experts suggest the legal threshold for proving state liability is high.
The legal fallout from the Credit Suisse debacle is far from over. Shareholders who received one UBS share for every 22 Credit Suisse shares continue to press their case before Zurich’s Commercial Court. Meanwhile, hundreds of investors are challenging the write off of CHF 16 billion in AT1 bonds—a controversial move by FINMA. Lawsuits have also been filed in American courts. For both Swiss and international tribunals, the Credit Suisse saga promises to continue for some time yet.
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