Regulators in the UK and Europe moved fast to reaffirm their commitment to the normal investor hierarchy in bank resolution — CET1 behind AT1s, AT1s behind T2 instruments — after it emerged Credit Suisse’s takeover would zero CHF 16bn worth of AT1 bonds, despite equity owners receiving CHF 3bn.

Despite outwardly professing support for the Swiss authorities’ actions, the tacit message from the UK and European regulators was crystal clear: ‘Don’t worry, we’d never do what the Swiss have just done.’ It’s just the thing jittery AT1 bond investors wanted to hear, but is it true?

Well, as the Bank of England noted in its press release, the hierarchy was followed during the recent SVB UK collapse. Meanwhile in Europe, the case of Spain’s Banco Popular — the first major test case for AT1 write-down — saw the equity fully wiped alongside the AT1s (and Tier 2 notes, for that matter), again in line with the hierarchy.

So far, so good – UK and European bank resolution working as advertised (or at least, as understood by most of the market prior to the Credit Suisse debacle).