Replacement of LIBOR – An Approach for the Swiss retail lending market

The discontinuation of LIBOR as of the end of 2021 is foreseeable. At the same time, for lack of suitable alternatives LIBOR is still the dominant reference rate in the Swiss retail lending market for floating rate borrowings. As a result, Swiss banks active in the mortgage lending market already now face the challenge to provide for a transition to a successor rate when entering into new contracts. And the same challenge exists generally, both in the retail and the institutional market. Homburger partners René Bösch and Benedikt Maurenbrecher have developed an idea how a LIBOR successor clause could look like for the Swiss retail lending market. The aim was to craft a simple, easy-to-read clause for retail clients that provides for a fair transition to a successor rate. The clause is embedded in well established principles of Swiss law.

The attachment contains the proposed clause, together with a few underlying considerations, which have been presented by René Bösch and Benedikt Maurenbrecher to the National Working Group on Swiss Franc Reference Rates on October 31, 2018 – in German and French, with an English translation. This news release and the attachment, including the clause, constitute neither advice nor a recommendation, but are solely made for the purpose of informing about the work of Homburger in this area.

Homburger AG

November 8, 2018

Für die deutsche Version klicken Sie hier.