Board of Governors of the Federal Reserve System

Washington, DC 20551

December 13, 2018

Mr. Eric Varvel

President and Chief Executive Officer

Credit Suisse Holdings U.S.A.

Eleven Madison Avenue

New York, New York 10010

Dear Mr. Varvel:

Credit Suisse Holdings U.S.A. (“Credit Suisse”), New York, New

York, the intermediate holding company subsidiary of Credit Suisse Group, A.G.,

Zurich, Switzerland,1 has requested the Board’s approval under the Board’s

Regulation YY2 of a contractual provision that must be included in certain debt

issued to Credit Suisse Group, A.G., or to other group entities, by Credit Suisse.

The Board’s regulation regarding total loss-absorbing capacity (the

TLAC Rule)3 requires the U.S. intermediate holding companies4 offoreign global

systemically important banking organizations (“Covered IHCs”) to maintain

outstanding a minimum amount of long-term debt that meets certain eligibility

criteria (“eligible long-term debt”)? With respect to debt issued by a Covered

IHC to its foreign affiliates, the eligible long-term debt must include a contractual

1 12 CFR 252.153.

2 12 CFR 252.161.

3 12 CFR 252.60-.65, .153, .160-.167.

4 The Board’s Regulation YY requires foreign banking organizations with $50

billion or more in total U.S. non-branch assets to form an intermediate holding

company in the United States. 12 CFR 252.153(a).

5 12 CFR 252.162.
provision that is approved by the Board and allows the Board to order the

conversion ofthe debt into common equity tier 1 capital (“conversion trigger").6

The Board has considered a number of factors in determining

whether to grant the request by Credit Suisse for approval of a conversion trigger.

In particular, the Board has considered:

(1) Whether the conversion trigger includes any conditions for triggering

the conversion other than the issuance of an internal debt conversion order

by the Board;

(2) Whether the instruments governing the long-term debt and related

documents mitigate any impediments to the conversion ofthe long-term

debt into equity capital;

(3) Whether the conversion trigger provides for the conversion ofthe longterm debt into common equity tier 1 capital;

(4) Whether the conversion trigger requires the conversion of long-term

debt in the amount specified by the Board’s internal debt conversion order;

and

(5) Whether, upon conversion oflong-term debt pursuant to the conversion

trigger, the converted long-term debt would no longer remain outstanding

as a liability ofthe Covered IHC.

Credit Suisse has provided information to the Board addressing each

ofthe factors noted above. Based on the relevant regulatory factors, and on a

review ofthe instrument governing the long-term debt and related documents and

other facts presented, the Board has approved the conversion trigger. This

decision is based on the specific facts and representations in your request and in

communications with Board staff, and any change in the facts or representations

should be communicated immediately to Board staff and could result in a different

conclusion. The Board’s approval ofthe request is specifically conditioned on

6 12 CFR 252.161. Under the Board’s regulations, the Board may issue an

internal debt conversion order only after first determining that the Covered IHC is

in “default or danger of default," and one ofthe following circumstances apply:

(1) a foreign banking organization that controls the Covered IHC (or any

subsidiary ofsuch entity) has been placed into resolution proceedings in its home

country; (2) the home country supervisor ofthe top-tier foreign banking

organization has consented or not promptly objected to the conversion of internal

long-term debt after notification by the Board; or (3) the Board has made a written

recommendation to the Secretary ofthe Treasury to put the Covered IHC into Title

II resolution proceedings. 12 CFR 252.163.
compliance by Credit Suisse with all ofthe commitments made to the Board in

connection with the request. The Board’s approval is limited solely to granting

approval ofthe conversion trigger.

Very truly yours,

Ann E. Misback

Secretary ofthe Board

cc: Heidi Kim

Brett Schildkraut

Anna Fairclough

Colleen Burke

Yan Huang

Federal Reserve Bank ofNew York