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Lawsuit to challenge Credit Suisse-UBS merger terms

Lawsuit to challenge Credit Suisse-UBS merger terms
Class action to challenge Credit Suisse-UBS merger terms. (Photo by Fabrice COFFRINI / AFP)

A legal startup said Thursday it had raised enough funds to proceed with a class-action lawsuit to seek a better deal for Credit Suisse shareholders in the bank's sale to UBS.

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Swiss officials, afraid that Credit Suisse could collapse in March with possibly catastrophic consequences for global financial markets, arranged a shotgun marriage with UBS, the nation's largest bank.

The terms of the merger were controversial, including the fact shareholders received some compensation while certain bondholders lost all of their money.

Small shareholders in Credit Suisse felt burned by the exchange ratio of one UBS share for 22.48 Credit Suisse shares, which valued the bank's equity capital at roughly three billion Swiss francs ($3.2 billion).

That valuation, decided during a weekend of frantic negotiations, was much less than the seven billion francs at the Friday close of trade, with the shares having by that time lost 80 percent of their value at the beginning of the year.

LegalPass, a startup created by two Swiss lawyers based in Lausanne, said it had more than 350 former Credit Suisse shareholders on board and had "reached the financing threshold to introduce its lawsuit on behalf of Credit Suisse shareholders".

It said it was the first class action suit in Switzerland for the bank's shareholders.

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"Credit Suisse shareholder weren't heard at the general shareholders meeting, we're going to give them a voice in court," LegalPass cofounder Alexandre Osti said in a statement.

Earlier this week, the Ethos Foundation that represents Swiss pension funds said it was joining the class action.

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