Author Archives: Lee Saladino
Discontinuation of LIBOR and Swiss Law-Governed Legacy Bonds – Time to Take a Closer Look
LIBOR was – and still is – the dominant reference rate for CHF-denominated floating rate and other variable interest rate bonds. There is still a significant number of outstanding “legacy bonds” with such variable interest rates that have maturities beyond the end of 2021, the announced time for the discontinuation of LIBOR. This article discusses considerations for issuers and bondholder representatives in dealing with such “legacy bonds”.
By René Bösch / Eduard De Zordi / Benjamin Leisinger / Lee Saladino (Reference: CapLaw-2019-28)
Basel III Implementation in Switzerland: Leverage Ratio and Liquidity
As of 1 January 2018, further elements of the Basel III international regulatory framework for banks on capital and liquidity entered into effect in Switzerland. Notably, the unweighted capital adequacy requirement (leverage ratio) was extended from systemically relevant banks to all banks by requiring a minimum core capital (Tier 1 capital) to total exposure ratio of 3%. As of the same date, the liquidity coverage ratio (LCR) requirement were adjusted to provide for certain simplifications, which will primarily benefit smaller financial institutions. The risk diversification requirements of Basel III measured against Tier 1 capital will enter into effect in Switzerland in 2019. The introduction of the net stable funding ratio (NSFR), which was originally planned for 1 January 2018, has been postponed.
By René Bösch / Benjamin Leisinger / Lee Saladino (Reference: CapLaw-2018-03)
The Financial Stability Board published its Guiding Principles on iTLAC
On 6 July 2017, the Financial Stability Board published its guiding principles on the loss-absorbing resources to be committed to subsidiaries or sub-groups that are located in host jurisdictions and deemed material for the resolution of a G-SIB as a whole (iTLAC). The guiding principles support the implementation of the iTLAC requirement in each host jurisdiction and provide guidance on the size and composition of the iTLAC requirement, cooperation and coordination between home and host authorities and the trigger mechanism for iTLAC.
By René Bösch / Benjamin Leisinger / Lee Saladino (Reference: CapLaw-2017-45)
PRIIPs: Potential Impact on Plain Vanilla Bond Market
Most Swiss financial service providers have been aware of, and have been preparing for, the effect the new EU regulation on key information documents for packaged retail and insurance-based investment products or “PRIIPs” will have on the offering of structured products and other complex financial products. However, recent attention in connection with the medium term note program update season in Europe has been paid to potential effects that the regulation may have on the offering of plain vanilla bonds and the corporate bond market generally. This article discusses these potential effects, including those that may be of particular importance to the Swiss financial market.
By Lee Saladino / Andreas Josuran (Reference: CapLaw-2017-27)