Homburger advised UBS Group Funding (Switzerland) AG on its issuance of JPY 150 bn Fixed Rate / Floating Rate Senior Notes guaranteed by UBS Group AG under its Senior Debt Programme

On November 9, 2018, UBS Group Funding (Switzerland) AG (the Issuer) successfully completed its issuance of JPY 150 bn aggregate principal amount of bail-inable (TLAC) notes under its Senior Debt Programme. The issuance consisted of two tranches, JPY 130 bn 0.719 per cent. Fixed Rate / Floating Rate Senior Notes due 2024 and JPY 20 bn 0.973 per cent. Fixed Rate / Floating Rate Senior Notes due 2028 (collectively, the Notes), each tranche being guaranteed by UBS Group AG. The Notes will be listed on both the SIX Swiss Exchange and the Tokyo Pro-Bond Market.

As with UBS’s previously issued bail-inable (TLAC) notes, the Notes contain contractual mechanics to (i) bring the Notes into the jurisdiction of the resolution powers of FINMA should restructuring proceedings be opened with respect to UBS Group AG, so that FINMA may exercise its statutory resolution powers to write-down the Notes and / or convert them into equity of UBS Group AG (i.e., an automatic issuer substitution feature), and (ii) safeguard the recognition of the exercise of such resolution powers by FINMA.

Structural subordination enables FINMA to fully or partially convert or write-down the Notes prior to the operating liabilities of the bank UBS AG. Because the Issuer is currently being used by UBS Group AG to issue notes qualifying as either bail-in bonds or additional tier 1 capital under the (Swiss) Capital Adequacy Ordinance, the Issuer has been declared a “relevant group company” pursuant to art. 2bis of the Swiss Banking Act. This means that FINMA will be able to exercise its statutory resolution powers with respect to the Issuer as well as UBS Group AG, allowing FINMA to take a comprehensive approach in a resolution scenario.

Homburger advised UBS in the structuring of the transaction and on all regulatory and transactional aspects as to Swiss law of the offer, the issuance of the Notes and the listing on the SIX Swiss Exchange.The Homburger team included partners Benedikt Maurenbrecher, Stefan Kramer (both Banking and Finance / Capital Markets) and Stefan Oesterhelt (Tax) as well as counsel Lee Saladino and associates Andreas Josuran and Andrea Ziswiler (all Banking and Finance / Capital Markets).