Switzerland has for decades marketed itself as a haven of legal certainty for bond and stock investors. The collapse of the Credit Suisse group revealed some uncomfortable truths.

To secure UBS’ takeover of its smaller rival over the weekend, the government pointed to the need for stability and urgent legislation to override two key aspects of open markets: competition law and shareholder rights. Bondholders subsequently found $17 billion worth of so-called additional Tier-1 debt worthless.

Beyond the stigma surrounding bank failures, legal observers say the three accidents raise some fundamental questions about the supremacy of Swiss banking law and make foreign investors suspicious of putting money into the country.

In announcing the government-brokered sale of Credit Suisse to its Zurich rival late Sunday, the Swiss government cited a clause in its constitution allowing it to issue temporary decrees “in response to severe public order disturbances or internal or internal disturbances order in existing or imminent threats to external security. “In this case, that includes merger laws that override shareholder votes.

Then, when Finma chairwoman Marlene Amstad was asked at a news conference later in the evening whether the government had ignored competition concerns in pushing for mergers, Amstad said financial stability trumped competition concerns.

“Regulatory law gives us the power to override a competitive situation in the interest of financial stability, and we’ve used that here,” she said.

According to a UBS investor presentation, Credit Suisse and UBS will collectively hold 333 billion Swiss francs ($360 billion) in customer deposits, 115 billion more than closest rival Raiffeisen.

But the biggest investor pushback to the deal has been Swiss banking regulator Finma’s decision to write down Credit Suisse’s AT1 bonds to zero.

AT1 bonds were introduced after the global financial crisis to ensure investors, not taxpayers, bear losses. They are designed to act as a capital buffer during times of stress. Crucially, most other banks in Europe and the UK have much more protection against such debt. Only the AT1 bonds issued by Credit Suisse and former Swiss rival UBS have language in their terms that allow for an outright wipeout rather than conversion to equity.

Even though the risks of these AT1 bonds were made clear to investors when signed, this stark example of Swiss exceptionalism marks a departure from the general rule that bondholders take precedence over shareholders.

The Ethos Foundation, whose 246 pension fund members represent 1.9 million people and have assets of 370 billion Swiss francs, has made as many threats to block shareholder votes.