(Bloomberg) -- UBS Group AG shareholders voted on a change that will make the bank’s recently-issued Additional Tier 1 bonds convertible, moving away from a feature that wiped out Credit Suisse investors last year.

The lender’s annual general meeting voted on Wednesday for the creation of conversion capital and amendments to the articles of association. The change means that any AT1s issued since the Credit Suisse takeover will be converted into equity rather than written down if loss clauses are triggered.

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Many holders of Credit Suisse’s most-junior bonds were caught out by a permanent writedown to zero mechanism that left them with nothing when the bank was taken over by UBS. The equity conversion mechanism was added when UBS returned to the AT1 market in late 2023, but it could only be activated once shareholders voted for the change. 

This approval “could facilitate further AT1 issuance,” Jeroen Julius, senior credit analyst at Bloomberg Intelligence, wrote in a note. The Swiss lender has sold almost $5 billion of AT1s since the takeover of Credit Suisse, according to data compiled by Bloomberg.

(Updates with Bloomberg Intelligence comment, recent issuance amount in fourth paragraph)

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