European stocks bounced off early lows on Monday as utilities and miners gained, offsetting some losses in bank stocks that were sparked by UBS' shotgun deal to buy Credit Suisse for a fraction of its market value.
it will pay 3 billion Swiss francs for the 167-year-old bank and assume up to $5.4 billion in losses.Investors were also spooked by news that Credit Suisse's additional tier-1 bonds - or AT1 bonds - with a notional value of $17 billion will be valued at zero,some of the holders of the debt who thought they would be better protected than shareholders.
"We are surprised how they are going about this AT1 capital," said Teeuwe Mevissen, senior macro strategist at Rabobank. "If you look at the seniority of both, equity holders should be the first ones to lose their money. Now doubt has been cast on this principle ... markets participants are confused and the decision comes with a lot of uncertainty."slid 1.8%, but recouped from sharp declines of 6% earlier when it hit a three-month low.
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