Last Updated April 26, 2019

Law and Practice

Contributed By Homburger

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Homburger A leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. Homburger regularly advises originators, arrangers, trustees and rating agencies on the structuring and implementation of onshore and cross-border securitisation transactions, including 'true sale' and risk-weighted assets-driven transactions, withholding tax-neutral cross-border RMBS and ABS transactions, securitisation platforms/receivable sales programmes and synthetic securitisations (including CLOs and CDOs). The team has provided legal and tax advice on a number of benchmark transactions, including the first public cross-border auto lease ABS transaction in the Swiss market, the first two contractual covered bond programmes in Switzerland and transactions involving statutory covered bonds (Pfandbriefe).

Capital requirements for Swiss banks and securities dealers are set out in the Capital Adequacy Ordinance (CAO). As a general rule, Article 49 et seq of the CAO provide that securitisation positions must be risk-weighted, with FINMA being competent to issue implementing provisions with respect to the risk weighting. The implementing provisions are contained in FINMA Circular 2017/07 'Credit Risk – Banks'. The basic rule set out in the Circular is that the Basel standards apply, including the 2016 Basel securitisation framework and rules relating to simple, transparent and comparable securitisations (STC securitisations) as well as pillar two requirements (cf, Basel II framework paragraphs 784-807 and related amendments pursuant to the revisions to the securitisation framework of 11 December 2014, as further revised in July 2016 and amended by the rules on "capital treatment for short-term simple, transparent and comparable securitisations" of May 2018.

As far as the Basel rules provide for optionality in the national implementation, FINMA Circular 2017/07 'Credit Risk – Banks' provides that banks may use a securitisation external ratings-based approach (SEC-ERBA) if the bank has the necessary expertise and an adequate internal process to verify ratings and rating methodologies applied, and applicable operational requirements are complied with.

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Authors



Homburger A leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. Homburger regularly advises originators, arrangers, trustees and rating agencies on the structuring and implementation of onshore and cross-border securitisation transactions, including 'true sale' and risk-weighted assets-driven transactions, withholding tax-neutral cross-border RMBS and ABS transactions, securitisation platforms/receivable sales programmes and synthetic securitisations (including CLOs and CDOs). The team has provided legal and tax advice on a number of benchmark transactions, including the first public cross-border auto lease ABS transaction in the Swiss market, the first two contractual covered bond programmes in Switzerland and transactions involving statutory covered bonds (Pfandbriefe).

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