Swiss financial authorities say 16 billion Swiss francs, or about 17 billion dollars, of Credit Suisse's bonds will be worthless as the firm will be bought by rival UBS.

The Swiss Financial Market Supervisory Authority, or FINMA, said on Sunday that Credit Suisse's bonds, called AT1, will be written down to zero.

Credit Suisse has been in financial trouble. Switzerland's largest banking group, UBS, recently agreed to take it over for 3 billion Swiss francs, or about 3.2 billion dollars.

AT1 bonds were introduced in preparation for possible shortages of banks' core capital. This came after large amounts of public funds were used to rescue financial institutions following the collapse of Lehman Brothers in 2008. Banks can include such bonds in their core capital when they fall into financial trouble. FINMA says the write-down of the bonds will increase Credit Suisse's core capital.

The announcement that the bonds would be wiped out has rattled financial markets.

Market sources say investors sold shares of financial institutions that issue similar bonds in Asia.