In the midst of a Credit Suisse AT1 bond wipeout, the Monetary Authority of Singapore said it will honor the liquidation claims hierarchy.
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.
