AllianceBernstein is preparing to sue the Swiss Confederation over the treatment of AT1 bonds during UBS's takeover of Credit Suisse.

The US asset manager aims to claim $225 million after the Swiss Financial Market Supervisory Authority (FINMA) declared $17 billion worth of these bonds worthless, leading to significant losses for investors.

AllianceBernstein will join a lawsuit initiated by law firm Quinn Emanuel Urquhart & Sullivan on behalf of Credit Suisse's bondholders, raising the total claim to approximately $375 million.

The lawsuit alleges that the Swiss government's intervention in the deal unlawfully infringed on investors' property rights.

AT1 bonds, designed to bolster banks' core capital, can be converted into equity or written off during financial distress.

The FINMA's ruling in March 2023, which deemed the public sector's support for Credit Suisse a triggering event for such actions, has resulted in numerous lawsuits and claims from affected investors.