Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on March 27, 2023 - April 2, 2023

Before the world could grasp what exactly went wrong at Credit Suisse, the Swiss Financial Market Supervisory Authority (Finma) threw the 167-year-old Swiss bank a lifeline by having UBS take over the lender.

Whether the restructuring plan, which includes writing off Credit Suisse’s Additional Tier 1 (AT1) bonds but paying stakeholders US$3.2 billion, is fair or not is up for debate.

But one thing is for sure, this has caused investors distress as the AT1 bonds, which are also called contingent convertible (CoCo) bonds, are worthless now.

On the home front, AHAM Asset Management Bhd suspended dealings of units in two of its bond funds — AHAM Single Bond Series 2 and AHAM Single Bond Series 4. The two funds have big exposure to Credit Suisse’s AT1 bonds.

AHAM issued a press statement to say that collectively, the size of the two funds represented less than 0.1% of its total assets under management of RM77 billion (as at Feb 28).

Ironically, Malaysian regulators have stayed silent, even though in a space of just a month, the world has witnessed two major shocks in the financial sector — the closure of Silicon Valley Bank and two other US lenders, as well as the collapse of Credit Suisse.

Should the Malaysian public take the fact that the authorities have not raised any red flags as a sign that the country’s financial system remains intact despite the turmoil in the West?

On the flip side, the silence will cause the public to speculate.

If the stress tests and assessments have shown that things are fine, what could be the reason for not revealing that to the public?

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