The Swiss solution to the Credit Suisse bailout will impact AT 1 bond issues, the convertible bonds. This was recognized by the CEO of Banco Sabadell, César González-Bueno, at a lunch with journalists prior to the shareholders’ meeting that the entity is holding tomorrow at its headquarters in Alicante. “AT1 bonds have behaved very negatively in the secondary market,” the banker acknowledged.
Let us remember that, contrary to the European order, it is the holders of this type of debt, known as CoCos, who will lose everything, while the Swiss solution compensates the shareholders first, reversing the order that exists in Europe. In this sense, González-Bueno explained that the entity should not issue this type of debt for quite some time, at least until 2026, which gives them some peace of mind since “now it could not be issued due to the risk in the market in terms of its perception”.
In this sense, he stressed that the bank has made the main issues in the first two months of the year, market conditions more favorable than the current ones, “those that remain are lower risk and subordinated debt,” he remarked.
Both González-Bueno and the president of Banco Sabadell have wanted to distance themselves from the crisis of confidence that was unleashed first by SVB and then by the Swiss entity. In this sense, he has recorded that more than 60% of the entity’s deposits are under the protection of the Deposit Guarantee Fund, as opposed to the US entity that exceeded the limit of 250,000 dollars. On the other hand, he has highlighted the rotation of the debt portfolio that the entity has carried out.
It also stands out due to the composition of its fixed income portfolio. “We sold 10,000 million euros in public debt, which allowed us to meet the 1,000 million indemnifications of the employment regulation file with the extraordinary ones obtained. at 2.1 years and we have another 3,000 million euros to invest.”
