Credit Suisse shares slid by almost 62% in Swiss premarket trading to around 0.61 Swiss francs (US$0.6578), while the value of its additional tier 1 (AT1) bonds – a type of contingent convertible bonds that is considered to be the riskiest type of debt banks can use – dropped as low as 1 cent on the dollar after the bank said 16 billion Swiss francs worth of the debt will be written down to zero.

The debt is being written down on the orders of the Swiss regulator as part of its rescue merger with UBS, it was announced on Sunday, which angered bondholders.

A US$1 billion AT1 bond with a coupon of 4.5% was bid as low as 1 cent on the dollar, Tradeweb pricing showed.

“The next few hours of trading will give us a better picture of whether the crisis is contained,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said.

“In theory, there is no reason for the Credit Suisse crisis to extend, as what triggered the last quake for Credit Suisse was a confidence crisis – which doesn’t concern UBS – a bank outside of the turmoil, with, in addition, ample liquidity and guarantee from the SNB (Swiss National Bank) and the government.”

In a package orchestrated by Swiss regulators on Sunday, UBS will pay 3 billion Swiss francs (US$3.23 billion) for Credit Suisse and assume up to US$5.4 billion in losses.

At Friday’s close, Credit Suisse had a total market value of US$8 billion. Just six months ago, it was worth US$13 billion.

Shares in UBS meanwhile, dropped nearly 5% in premarket trading to around 15.81 francs.