Well, here we all are again. A big bank has been wound up, people have lost money, and everyone is shouting. It feels like another crisis is in the offing, markets are nervous, and the banking community is wringing its hands. The fall of Credit Suisse has sparked strong emotions. What we are also seeing, however, is fallout from some unfinished business from the financial crisis.
At the heart of today’s polemic is the fate of the holders of a series of arcane instruments, referred to as AT1 (additional Tier 1) bonds or CoCos (so-called ‘contingent convertibles’). The financial press has been scrutinising, in particular, the experience of the holders of Credit Suisse’s $17.5bn of AT1s and, more broadly, the implications for the rest of the $280bn AT1 market.
