Co-published Covered bonds guide: Switzerland


register of the relevant Pfandbrief issuer. Secondly, the claims of the relevant Pfandbrief issuer against the participating bank under the relevant loan are secured by a statutory lien over mortgages granted by the participating bank. The relevant lien extends both to the claim of the participating bank against the relevant borrower under the relevant mortgage loan and to the security (normally a mortgage certificate, Schuldbrief) granted for it, and covers principal and interest. The lien is created by registering the cover mortgages in a special register maintained by the participating bank. However, both of these liens can only be


enforced in a bankruptcy proceeding of the Pfandbrief issuer or the member bank. Effectively, this means that in a hypothetical insolvency of a Pfandbrief issuer, all claims under all Pfandbriefe issued benefit from the security provided by the aggregate cover pool on a pro-rata basis. In an insolvency of a member bank, the mortgages encumbered would be liquidated for the benefit of the Pfandbrief issuer with a view to cover its claims under the loans granted to the member bank.


Swiss structured covered bonds Due to the limitations applicable to the Swiss Pfandbrief market, and in response to the tightening of the market for liquidity during the financial crisis, the two big Swiss banks developed structured covered bond programmes which fall outside the scope of the PfG. The contractual structure of these programmes allowed UBS and Credit Suisse to include a number of structuring features which aim to improve investor protection and enabled the covered bonds to be allocated an AAA/Aaa rating. Under Swiss covered bond issuance


programmes, covered bonds are issued into the international market by the UK or other non-Swiss branch of a Swiss bank as issuer. Initially, issuances were predominantly made relying on Regulation S under the US Securities Act of 1933 into the European market. More recently, both issuers followed up with 144A offerings into the United States.


Key elements There are a number of key elements of this structure: • The Swiss bank, acting through a non- Swiss branch, issues covered bonds as direct, unconditional and unsubordinated obligations of the issuer.


• The obligations of the issuer under the covered bonds benefit from a guarantee issued by a subsidiary of the issuer under a so-called guarantee mandate agreement


www.iflr.com Author biographies


Dieter Grünblatt Homburger


Dieter Grünblatt graduated from the University of Basel School of Law in 1989. He holds a doctorate (Dr iur) in law from the University of Basel (1994) and an LLM from New York University, where he completed postgraduate studies with a focus on corporate finance and corporate tax law in autumn 1997. He was admitted to the Baselland Bar in 1996 and the New York Bar in 1998. He has been a Certified Tax Expert since 2000. Grünblatt joined Homburger in 1997 and has been a partner since 2005.


Grünblatt focuses on tax structuring of national and international capital market trans-


actions, collective investment schemes, real estate investments, structured financial instruments, private equity and fund management structures. He designs acquisitions and reorganisations, and advises on employee stock option plans, pension plans and social security taxes and VAT. He published his doctoral thesis on non-fiscal taxation objectives (Basel 1994). He is


co-author of the Basel Commentary on tax aspects of Corporate Divisions and Asset Transfers under the new Swiss Merger Law (Helbling & Lichtenhahn, Basel 2004) and author of the tax section on Securities Transactions in Europe (CCH, Chicago 2004), Getting the Deal Through – Mergers & Acquisitions 2011 – Switzerland (Getting the Deal Through, London 2011) and the tax section of Corporate Laws of the World – Swiss Country Report, 2011.


Stefan Kramer Homburger


Stefan Kramer advises clients in matters involving capital markets, structured finance and banking law. In structured finance he focuses on covered bonds and securitisation trans- actions. In addition, he advises companies with respect to stock exchange laws and corporate matters. He has published various books and articles on financial services regulation and is a co- editor of the Commentary on the Swiss Banking Act. Stefan Kramer is admitted to the Swiss bar, holds a doctorate


from the University of Zurich (2005) and an LLM from Harvard Law School (2010).


Benedikt Maurenbrecher Homburger


Benedikt Maurenbrecher’s practice focuses on banking, finance and capital markets. He is experienced in a broad range of transactions, notably in the areas of equity capital markets, secured and unsecured lending, covered bonds, securitisation and derivatives. He is an Authorised Issuers’ Representative at the SIX Swiss Exchange. Maurenbrecher also advises on domestic and cross-border aspects of banking, securities and investment fund regulation,


and regularly represents market participants in related regulatory proceedings and civil litigation. He is a member of the Banking Committee and the Securities Committee of the


International Bar Association, and currently heads the Banking Committee’s subcom- mittee on innovations in legal transactions.


in favour of the holders of covered bonds, represented by the bond trustee.


• Under the guarantee mandate agreement, all liabilities, costs and expenses incurred by the guarantor under or in connection


with the guarantee will have to be reimbursed (or pre-funded accordingly), by the issuer.


• As security for the relevant reimbursement and pre-funding claims of


IFLR/July/August 2013 67


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