European regulators distanced themselves from Switzerland’s decision to write down $17 billion in Credit Suisse bonds after bailing out the bank, saying they would first review shareholders’ investments downward, CNBC reported.

Dominique Labouret, president of the EU’s Single Resolution Board, sent a clear message to investors in an exclusive interview with CNBC.

“In the resolution [bancară]”In the European context, we would follow the hierarchy and we wanted to say very clearly to investors, so that we are not misunderstood: we have no choice but to respect that hierarchy,” Laboreau said on Wednesday.

The announcement comes after Swiss regulator FINMA announced earlier this month that Credit Suisse’s Additional Tier One (AT1) bonds, typically considered relatively risky investments, would be zeroed, with investors receiving more than $3 billion in as part of the takeover of the UBS bank. , upsetting bondholders.

In a joint statement with the ECB’s Office of Banking Supervision and the European Banking Authority, the Single Resolution Board said on March 20 that “ordinary equity instruments are the first to absorb losses, and only then will AT1 securities be designated.”

The standard hierarchy or structure considers equity investments classified as secondary to bonds when the bank is bailed out.

The Swiss decision prompted some AT1 Credit Suisse bondholders to consider legal action and created uncertainty for bondholders around the world.

“As the resolution authority responsible for the Banking Union settlement framework, I can tell you that I will fully and completely respect the legal framework. So in the resolution, when I adopt the settlement scheme, I will follow this hierarchy, starting with the share takeover, then AT1, then Tier 2 and then the rest,” Labure said.

Switzerland is not part of the European Union and is therefore not subject to the region’s banking regulations.

The Single Resolution Board began working in 2015 as a result of the global financial and sovereign debt crisis.

Its main function is to ensure the least possible impact on the real economy if a bank fails in the Eurozone.

Recent banking turmoil began in the US with the collapse of Silvergate Capital, a cryptocurrency-focused bank.

Shortly thereafter, regulators shut down Silicon Valley Bank and then Signature Bank after massive deposit outflows in an effort to prevent contagion in the sector.

Since then, First Republic Bank has received support from other banks, and in Switzerland authorities asked UBS to bail out Credit Suisse.

Shares in Deutsche Bank fell sharply late last week, prompting some to wonder whether the German bank could be next, although analysts stressed its financial health looked strong.

For eurozone regulators, the collapse of Silicon Valley Bank, and perhaps its aftermath, could have been avoided if stricter banking rules had been in place.

“There would be strict rules in such a bank. I’m not condemning … but I understand that these mid-sized banks, the so-called mid-sized banks in the US, were actually large banks compared to ours in the banking union,” Laboreau said.

European lawmakers previously told CNBC that U.S. regulators made mistakes in preventing the collapse of SVB and others.

One of the key differences between the US and Europe is that the US has a looser set of capital rules for smaller banks.