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Written question asked by Alun Cairns (Conservative) on Wednesday, 22 March 2023, in the House of Commons. It was due for an answer on Friday, 24 March 2023. It was answered by Andrew Griffith (Conservative) on Monday, 27 March 2023 on behalf of the Treasury.

Credit Suisse: Takeovers

Question

To ask the Chancellor of the Exchequer, what assessment he has made of the potential implications for (a) his policies and (b) the banking sector of the treatment of additional tier-one bondholders in the takeover of Credit Suisse.

Answer

As noted by the Chancellor on Monday 20 March, the Government welcomes the steps taken by the Swiss authorities in relation to Credit Suisse to support financial stability.

The Bank of England published a statement to reiterate the creditor hierarchy in the UK. The statement confirmed that Additional Tier 1 (AT1) instruments rank ahead of Common Equity Tier 1 (CET1) and behind Tier 2 (T2) instruments in the insolvency creditor hierarchy. Holders of such instruments should expect to be exposed to losses in resolution or insolvency in the order of their positions in this hierarchy.

The Prudential Regulation Authority is responsible for supervising UK banks’ capital adequacy requirements. The Bank of England's quarterly statistical release shows that the value of Additional Tier 1 capital in the UK banking sector was £67 billion as at Q3 2022. This figure includes both externally issued and intragroup capital instruments.

The Governor of the Bank of England has confirmed that the UK banking system remains safe, sound and well capitalised.

Secondary information

Type
Written question
Reference
171395
Session
2022-23
Grouped for answer
Yes
Subjects
Banks Finance Takeovers Credit Suisse
Link
View this Written question on www.parliament.uk