Bonded in Dispute: Credit Suisse AT-1 Fallout Sparks Legal Heat for HDFC Bank

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A banking scandal of high stakes is unfolding as angry investors of Credit Suisse's Additional Tier-1 (AT-1) bonds have complained to the Economic Offences Wing (EOW) in Nagpur about mis-selling by HDFC Bank employees. The bonds, sold in 2021, were written down to zero in 2023 after the acquisition of Credit Suisse by UBS, and have unleashed a deluge of complaints and regulatory heat.

Investor Claims

Four wealthy individuals, comprising senior managers and NRIs, claim that they were cheated into investing in risky AT-1 bonds with a 10–13% return promise
Complainants are Narendra Singru (Asian Development Bank), Ashutosh Tiwary (MTN Guinea Bissau), Pankaj Sinha (Coca-Cola), and Varun Mahajan (GARAVA Investment & Consulting).
Infractions involve overstatement of income disclosures, omission of risk warnings, and misuse of fixed deposits to fund bond purchases
Bonds were sold via HDFC Bank's Middle East franchise, making jurisdiction and regulation complicated

Legal and Regulatory Developments

Complaints have been lodged in Nagpur, Chandigarh, and Gurgaon, with numerous others to follow
Law firm AK & Partners is acting for the investors and can extend representation
UAE authorities are reported to be investigating HDFC Bank's role in the alleged mis-selling to the NRIs
HDFC Bank has reported that they have not received any official summons yet

Financial Impacts

Investors incur losses of Rs 20–25 crore
The AT-1 bonds were fully written off in March 2023, and the holders have no recourse
The case also poses questions of broader transparency, risk disclosure, and cross-border banking practice

Sources: Moneycontrol, NDTV Profit, Financial Express, Outlook Business.