UBS Defeats Ex-Credit Suisse Managing Directors’ Back-Pay Claims

(Bloomberg) -- UBS Group AG prevailed against two former Credit Suisse Group AG managing directors who argued their deferred-compensation certificates shouldn’t have been written down when the banks merged in 2023.

UBS on Wednesday asked a New York state court to confirm decisions by arbitrators rejecting claims by the former managing directors, Martin Ego and Jeffrey Jennings. Their cases are among a number the Swiss bank has faced from former senior Credit Suisse bankers over so-called contingent capital award certificates, or CCAs.

The Swiss government brokered the merger to rescue Credit Suisse, which was then in danger of collapse. As part of the deal, it required UBS to write down CCAs, which Credit Suisse awarded as deferred compensation, along with $17 billion in so-called additional tier 1 instruments, or AT1s. CCAs were modeled on AT1s. and both were designed to be written down or converted to equity when banks are in danger.

Quick answers to key questions

•5 QUESTIONS

1

What are Credit Suisse contingent capital award certificates (CCAs)?⌵

CCAs were deferred-compensation awards given to Credit Suisse employees. They were modeled on AT1 instruments and designed to be written down or converted to equity when a bank was in danger.

2

Why were Credit Suisse employees’ CCAs written down during the UBS merger?⌵

As part of the government-brokered 2023 rescue merger, Switzerland required UBS to write down Credit Suisse’s CCAs, along with $17 billion in AT1 instruments.

3

Why did former Credit Suisse managing directors challenge the CCA write-down?⌵

Martin Ego and Jeffrey Jennings argued that no “viability event” had occurred to trigger the write-down. They said Credit Suisse still met minimum capital requirements and that government assistance addressed liquidity, not capital adequacy.

4

What was the outcome of Ego and Jennings’ CCA back-pay claims?⌵

An arbitrator rejected both claims, and UBS asked a New York state court to confirm the arbitration decisions. The arbitrator interpreted capital adequacy broadly to include a bank’s ability to manage risks, absorb losses and continue operating under stress.

5

Did all former Credit Suisse bankers lose their CCA claims?⌵

No. A different arbitrator ruled in favor of former executive Matt Mitchell, awarding him nearly $1 million. UBS is seeking to overturn that award.

Though the Swiss Financial Market Supervisory Authority decreed otherwise, Ego, Jennings and other bankers argued that there was no “viability event” that triggered the CCA writedown provisions. They pointed to language in the instruments’ offering plan that they said showed that such an event could only take place when other means of improving Credit Suisse’s “capital adequacy” were unavailable or ineffective.

According to the bankers, since Credit Suisse continued to meet minimum capital requirements during the crisis, any government assistance should be regarded as supporting liquidity rather than capital adequacy. But the arbitrator rejected that reasoning, finding that “‘capital adequacy’ is a broad term encompassing a bank’s ability to manage risks, absorb losses, and continue functioning in the face of financial and economic stresses.”

A different arbitrator reached the opposite conclusion in a case brought by Matt Mitchell, Credit Suisse’s former global co-head of foreign exchange and precious metals trading. UBS is currently seeking to overturn a nearly $1 million award to Mitchell. The bank said it was confronting “an impossible choice” of disobeying the Swiss government or not complying with the arbitration award.

UBS has also asked a court to uphold a separate arbitration decision denying payment to Credit Suisse’s former communications head, Adam Gishen.

Last week, Switzerland’s top court ruled that Credit Suisse bankers that lost their bonuses when the bank was rescued by UBS won’t get that money back, overturning an earlier ruling that could have benefited as many as 1,000 former employees. UBS is also appealing a Swiss administrative court’s decision to revoke the writedown of AT1 bonds ordered Finma as part of the bailout package.

Ego worked in the fixed-income department from 2015 to October 2021 and was awarded certificates totaling $360,000. Jennings joined Credit Suisse Securities in 2009 and worked as the head of prime services for Europe, the Middle East and Africa and the head of the Dublin branch before leaving the bank in December 2019. He received more than $595,000 in certificates.

Joshua Slocum, a lawyer who represented Ego and Jennings as well as Mitchell and Gishen, declined to comment. UBS also declined to comment.

UBS has also faced a wave of suits by AT1 holders. A federal appeals court in New York earlier this year ruled that AT1 bondholders couldn’t sue the Swiss government in the US over the writedown, upholding a lower court decision dismissing their suit.

Credit Suisse was pushed to the brink of collapse following a series of adverse events, including the implosion of Archegos Capital Management in 2021. The Swiss bank was the largest counterparty of Archegos and ultimately lost more than $5 billion after the failure of Bill Hwang’s family office.

UBS is chipping away at other legal issues it inherited in the 2023 acquisition of Credit Suisse. At the end of the second quarter, UBS estimated its contingent liabilities from the Credit Suisse deal at $300 million, down from $1.5 billion the year before. UBS Chief Executive Officer Sergio Ermotti said in July that the integration of Credit Suisse is almost complete.

More stories like this are available on bloomberg.com

©2026 Bloomberg L.P.

Get Latest real-time updates

Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

More

✕

Wait for it…

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.