Valiant Bank is establishing a covered bond programme and plans to enter the market in 2017 or 2018, in a move that would revive issuance from individual Swiss banks, with UBS and Credit Suisse discontinuing their programmes and the only other Swiss supply being domestic pooled issuance.

Marcus Händel, head of investor relations at Valiant Bank, told The CBR the bank is planning to issue its first covered bonds in 2017-2018, with the instrument considered as a new source to finance growth.

UBS and Credit Suisse previously set up covered bond programmes, but Valiant would be the first among smaller Swiss banks to enter the market, and would revive the sector given that the two big Swiss banks are discontinuing issuance off their programmes.

UBS’s and Credit Suisse’s programmes were structured on a contractual basis because Swiss covered bond legislation is restricted to issuance by two central issuing institutions through which banks can refinance their mortgages: Pfandbriefzentrale der schweizerischen Kantonalbanken and Pfandbriefbank schweizerischer Hypothekarinstitute.

Valiant Bank has hitherto funded part of its mortgage lending through the Pfandbriefbank, and it will continue to do so alongside the new programme.

As of 30 June, the bank had a mortgage book of Sfr20.5bn (Eu19bn). Headquartered in Bern, it characterises itself as a retail and SME bank.

It was upgraded from A2 to A1 by Moody’s in June.

Photo credit: Valiant Bank