In the midst of a Credit Suisse AT1 bond wipeout, the Monetary Authority of Singapore is exercising its powers to allow investors to potentially claim some losses from an industry-funded pool.
Singapore’s financial regulator is exercising powers that will allow it to «abide by the hierarchy of claims in liquidation» and cover AT1 investor losses through a resolution fund financed by the industry.
«This means that equity holders will absorb losses before holders of Additional Tier 1 (AT1) and Tier 2 capital instruments,» the Monetary Authority of Singapore (MAS) said in a statement.
Resolution Fund
According to MAS, investors can use the resolution fund to claim the difference, if any, between the amount received from a resolution and the amount that would have been received from the liquidation of a financial institution.
«MAS’ resolution framework is in line with the Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions,» the regulator added.
The Singapore watchdog’s statement follows a recent decision by Swiss authorities to write off 16 billion Swiss francs ($17 billion) of Credit Suisse’s AT1 debt as part of its rescue merger with UBS.
