Hi, and a happy new year!
I am new here, but as we get closer to the end of this SNS saga, I would like to exchange views with you here. I am an bondholder and rather pleased with the work of the reporting experts. Now, enough about me, SNS is the topic.
I. Let'sassume that the draft report will not differ much from the final report. What will then be the next steps?
1) Does the court rule on compensation right away, or will there be lenghty arguments again? [My guess, but it is really nothing more than a gut feeling is: no, because after the report all that is left are just matters of technicality.]
2) Would then still be more room for appeals to higher courts? [My guess is: yes, but only in theory as this has already been with higher courts; the state would only produce costs.]
3) If a court ruling is final, will it be binding on the state against all bondholders / shareholders? [My guess is: Yes].
4) If a court ruling is final and binding on the state against all bondholders / shareholders, how would then the compensation be paid? I see two possibilities here:
4.1 The state (most likely FinMin supported by a lawfirm) could pay out the compensation on an individual basis after the former owners have sent in proof of their expropriation claim. This would probably lead to lower "costs" to the state, as not everyone would (be able to) present their claim. This would also be an argument against this procedure, as this would seem rather unjust. The biggest argument from the view of the state is that this would produce a lot of bureaucrazy with possibly thousands of individual applications to be verified...
4.2 The state could also pay very conveniently to a paying agents. The compensation would then -just like a normal payment of interest or principal or dividends- be routed via Clearstream/Euroclear to the banks (brokers/custodians) of the individual bondholders/shareholders. Even though the bonds/shares do not exist anymore I know for a fact that the securities still exist as dummies in the records exactly for this purpose of channeling payments to former holders. The advantage for the state is clear: much less bureacrazy and less costs for lawyers. Also, a payment to all former holders seems fair. The disadvantage for the state: possibly no "savings" from the bond/shareholders that would not present their claims...
II. Coming back to the issue of (statutory) interest again. Will there be a difference between corporations and private individuals? Can someone point me to the (section in the) law that codifies interest on compensation after expropriation?
III. I have two quibbles/objections to the draft report:
1) The experts explore two scenarios and say that both are relavant. The compensation values for the securities differs between those scenarios. I would argue that the higher value would have to be taken for the compensation - but the expert say nothing about this, or do they?
2) A real flaw in thinking (at least to me) seems to be that they attribute a 25 % value to the Tier1-bonds in the "CVC-case" as there was a buy-back planned. But to my knowledge these buybacks would have been voluntary, not mandatory. But they don't talk about the possibility of bondholders not accepting the buyback. Especially the T1 of the Bank would not have had a reason to accept the buy-back, as their expectation from the bankruptcy-scenario would have been higher. This plays back to above quibble 1) - it is unreasonable to take the lower value of the CVC-scenario here. In any case, the conditions of the planned buyback would have to be looked into closer, I think. For example, if a minimim take-up (of the buyback, for instance 66% of bondholders accepting) would have been a condition for the whole CVC-scenario to play out, this would have to be taken into account. In order not to "reward" hold-outs one could calculate the evenly now to be compensated value then by (66 % x 25% + 33% x 100 %). Just a thought.
So regarding the draft, there is still some room for clarifications.
In any case, thanks for the open discussion here, let's hope 2018. will be a good year for SNS Bondholders!