(Bloomberg) -- European and UK banking regulators sought to reassure markets Monday after holders of Credit Suisse Group AG’s riskiest bonds suffered a historic writedown as part of its takeover by UBS Group AG. 

Junior creditors should bear losses only after equity holders have been fully wiped out, according to a joint statement from the Single Resolution Board, the European Banking Authority and the ECB Banking Supervision. 

The regulators’ statements failed to lift lenders’ AT1s from their slump, after the European banks’ notes saw steep declines in the wake of the Credit Suisse news.   

The wipeout of 16 billion francs ($17.2 billion) of Credit Suisse’s so-called AT1 bonds after UBS agreed to buy the bank is the biggest loss yet for Europe’s $275 billion market in these securities, which were created after the financial crisis to ensure losses would be borne by investors not taxpayers. 

Banks’ Riskiest Bonds Sink as Credit Suisse Wipeout Jolts Market

“Common equity instruments are the first ones to absorb losses, and only after their full use would Additional Tier One be required to be written down,” the statement said. “This approach has been consistently applied in past cases and will continue to guide the actions of the SRB and ECB banking supervision in crisis interventions.”

The Bank of England said in a separate statement that the UK’s bank resolution framework has a “clear statutory order” for bearing losses, with AT1 instruments ranking ahead of common equity tier one capital. That was the framework used for the recent Silicon Valley Bank UK Ltd. resolution.

In their respective statements, the EU and UK authorities said they welcomed the comprehensive set of actions taken by the Swiss authorities to ensure stability. They also said that the European banking sector remains resilient, with robust levels of capital and liquidity.

(Adds details of BoE statement throughout.)

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