Li Changgeng, general manager of Cathay Financial Holdings, questioned at the law conference today that Credit Suisse emphasized that its capital and liquidity met the supervision requirements before being acquired. "Then why cancel AT1?"

(Photo by reporter Wu Xintian)

[Reporter Wu Xintian/Report from Taipei] Credit Suisse’s storm spread. Wealth management clients of 5 banks in China invested RMB 1.6 billion in Credit Suisse’s AT1 bonds and faced immediate cancellation.

Li Changgeng, general manager of Cathay Financial Holdings, questioned at the legal briefing today that Credit Suisse emphasized that capital and liquidity met the supervision requirements before being acquired. "Then why cancel AT1?" He called for assistance to investors in fighting for rights from the Swiss authorities.

He also admitted that Cathay Pacific has financial management clients investing in Credit Suisse AT1 bonds.

Lin Zhaoting, vice president of Cathay Life Insurance, pointed out that China Life’s exposure to Credit Suisse is 34 billion yuan, but it is mainly the primary bond and the international board bond. At present, there will be no loss, and there is no need to list credit impairment, and the value has rebounded significantly; Shou itself does not hold Credit Suisse AT1 bonds, but has invested more than 10 billion in AT1 bonds of other financial institutions, including more than 2 billion in Europe, and the evaluation is very good.

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Li Changgeng said that under the leadership of the Swiss government and supervisory authorities, UBS’s acquisition of Credit Suisse went smoothly. In theory, all domestic institutional legal persons or individuals invest in bonds other than Credit Suisse’s AT1, and theoretically the creditor’s rights are more guaranteed; Originally holding the credit of Credit Suisse, after the merger of the two companies, they were all transferred to UBS, and the creditor's rights of investors were more guaranteed.

He changed the subject and mentioned that there are personal wealth management clients in Taiwan investing in Credit Suisse AT1 bonds. According to the terms of AT1 bond issuance, there is nothing wrong with having the right to cancel in extreme situations; but Li Changgeng mentioned that at the merger press conference, Switzerland Financial supervisory agency Finma still emphasizes that Credit Suisse’s capital and liquidity have met the supervisory requirements, and Li Changgeng questioned, “Then why should we cancel AT1 directly?”

He believes that this is a very special case in the capital market. He personally thinks that if institutions sell Credit Suisse AT1 bonds to clients, they should assist investors to fight for their rights from the Swiss authorities, because this has never happened before.

When asked by the media after the meeting, Li Changgeng also admitted that Cathay Pacific has financial management clients investing in Credit Suisse AT1 bonds.

Lin Zhaoting, executive vice president of Cathay Life Insurance, also said that after Finma announced the cancellation of Credit Suisse AT1 bonds, the European Central Bank (ECB) came out the next day and said that this is a very special case, because AT1 bonds should be better than stocks.

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