HONG KONG – The Hong Kong Monetary Authority (HKMA) reassured investors that subordinated debt holders have priority over shareholders when banks are being wound up, in a response to media inquiries regarding creditor hierarchy in the Asian financial hub.

Under the Financial Institutions (Resolution) Ordinance, there is a clear order in which shareholders and creditors would bear losses, HKMA said in a statement on Wednesday. That means shareholders are the first ones to absorb losses, followed by holders of capital instruments including additional tier 1 and tier 2 capital, the statement added.

The Hong Kong watchdog’s statement comes as rattled global investors re-examine AT1 instruments and their place in the pecking order, after Credit Suisse Group’s overhaul shocked the market by wiping out its AT1 bonds while preserving billions of dollars of value for equity investors.

Some Asian banks, including Hong Kong-based Bank of East Asia, saw their AT1 notes fall by a record earlier this week, before staging a partial recovery on Wednesday.

HKMA’s global peers from Canada to Europe issued similar statements on the rules in their respective jurisdictions, as they sought to restore calm to their markets. BLOOMBERG