SWITZERLAND Trends and Developments Contributed by: Johannes Bürgi, Roger Amman, Lukas Wyss and Maurus Winzap, Walder Wyss Ltd
for the two independent shareholders to have a joint veto right for most of the resolutions of the general shareholders meeting. The guarantor typically has up to four board members, two of which need to be independent board members (including the chair and the vice-chair). In view of the bankruptcy remoteness of SPEs, the pur - pose of the guarantor is very narrow and in prin - ciple limited to entering into certain transactions that are related to the covered bond programme. Guarantee and security interests A guarantee is issued by the guarantor in favour of the covered bondholders on the basis of a guarantee mandate. The guarantee essentially covers all obligations of the issuer towards the covered bondholders under the covered bonds and may be drawn by the trustee subject to the certain guarantee activation events occurring. Any amounts that become due and payable under the guarantee will need to be fully reim - bursed by the issuer, which will also be under an obligation to pre-fund these reimbursement obligations. These obligations of the issuer towards the guar - antor to reimburse the guarantor for payments under the guarantee and the pre-funding obli - gations of the issuer towards the guarantor are secured by the issuer providing security over the cover asset pool in favour of the guarantor. Cover pool assets The cover pool assets that secure the obliga - tions of the issuer towards the guarantor typi - cally consists of mortgage loans (residential and/ or commercial) or, in the recent past, auto lease receivables made available by the issuer to its clients. In the case of mortgage loans, entitle - ment to the mortgage notes securing a relevant mortgage loan is also transferred for security purposes by the issuer to the guarantor. In addi -
tion, certain substitute assets (such as cash or other assets satisfying certain criteria) may be part of the cover pool. There are certain tests (such as an asset cover test and an interest cov - er test) that the cover pool must fulfil and the cover pool will have to provide for over-collat - eralisation (ie, exceed the aggregate amount of all covered bonds issued at the relevant point). Changes to the cover pool during the lifetime of the covered bonds are possible (eg, by adding or replacing certain assets), subject to specific requirements being fulfilled. Outlook With the latest public covered bond programme set up in Switzerland in 2023 by a global Swiss bank and various very successful issuances thereunder in 2023 and 2024, the Swiss covered bond structure has again proven to be a reliable and robust funding tool, which is very well per - ceived by the market. Given this continued suc - cess of covered bonds, other banks or owners of other suitable assets might follow in setting up similar covered bond programmes in the future. Interest Rate Environment Due to inflationary pressure in Switzerland, the Swiss National Bank (SNB) increased its policy rate from minus 75 basis in 2022 in several steps to 175 basis points in June 2023. Since inflation in Switzerland has been relatively moderate in 2023 and 2024 the SNB has decreased its poli - cy rate again in March, June and October 2024 each time by 25 basis points to currently 1.00%. With an outlook of further decreasing inflationary pressure in 2025 and inflation thus expected to lie, within the target band set by SNB of 0-2%, it is expected that interest rates may be cut even further in 2025, always also depending on the ongoing assessment of the overall economic and inflationary outlook.
435 CHAMBERS.COM
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