Optimizing Real Asset Investments for Bank's
Enhance your client offering with innovative securitisation solutions tailored to Switzerland's dynamic banking landscape.
New regulatory changes for banks: Basel IV/CRR/Output Floor
Capital Requirement:
In late 2022, the European Banking Authority (EBA) released its first Basel III monitoring report, predicting that full implementation by 2028 will raise EU banks' capital requirements by average 15%, necessitating an extra EUR 1.2 billion in core capital.
Increased Output Floor:
The new Output Floor of 72.5% limits the capital relief banks can gain from internal models. Banks must now hold at least 72.5% of the capital requirements under the standard approach, up from the previous 50%.
Risk Weighted Assets (view only on Real Estate):
Under Basel III, claims secured by residential or commercial real estate have risk weights of 35% and 100%, respectively. Basel IV introduces a revised approach with greater granularity. Exposures are treated differently based on whether the property is residential or commercial and whether the exposure depends on cash flows generated by the property. Banks must use the “Whole Loan” approach, assigning risk weights to different LTV buckets. Alternatively, with supervisory approval, a “Loan Splitting” approach can be applied for exposures not significantly dependent on cash flows.
Impact of Basel IV on the real estate and mortgage market
- Increased capital costs due to higher capital requirements:
Banks will need to hold more equity (by average 15%) for real estate loans due to higher risk weights and the Output Floor. This could strain bank margins and lead to higher interest rates for customers.
- Tighter lending criteria:
To offset higher capital requirements, banks may tighten their lending criteria, such as implementing stricter LTV limits or higher borrower creditworthiness requirements.
- Liquidation value:
Banks are placing greater emphasis on the liquidation value of properties, especially in crisis situations where properties are used as collateral.
Our Solution for Banks
Significant Risk Transfer (SRT) SH Schweizer Hypotheken AG merges regulatory know-how with market insights to provide practical, sustainable solutions. Our mission? To transform regulatory hurdles into strategic advantages for our clients.
SH Schweizer Hypotheken AG in the European Financial Landscape
Europe's financial scene is changing at a breakneck pace, and SH Schweizer Hypotheken AG, a financial services provider based in Switzerland, is right there to help banks and other financial institutions navigate this shift.
SH Schweizer Hypotheken AG offer tailored solutions for smarter balance sheet management, better capital utilization, and improved risk control, empowering their clients to stay ahead in a constantly evolving regulatory landscape. One standout feature of their offerings is Significant Risk Transfer (SRT).
This innovative approach allows SH Schweizer Hypotheken AG to assist partner banks in shifting a portion of their credit risk to external investors, all while enabling them to keep their client relationships intact and continue managing their loan portfolios without a hitch. With the Basel IV regulations — often dubbed the Basel "Endgame" — set to roll out in 2025, these kinds of solutions are becoming more crucial than ever. The new framework brings tougher capital requirements across Europe.
By tapping into SH Schweizer Hypotheken AG’s SRT expertise, financial institutions can proactively ease regulatory burdens, free up capital, and maintain their competitive edge in a more stringent supervisory environment.
What is Significant Risk Transfer (SRT)?
In a nutshell, SRT is a cutting-edge financial strategy brought to you by allswiss, a specialized service provider catering to banks and insurance companies. Its main aim is to assist partner institutions in transferring a portion of the credit risk associated with specific portfolios—like corporate loans, SME financing, or mortgages—over to professional investors in a way that's both efficient and controlled.
This is done through structured solutions such as Credit-Linked Notes (CLNs), guarantee structures, or Mortgage-Backed Securities (MBS).
These financial instruments enable the transfer of risk without having to remove the underlying loans from the institution’s balance sheet, which adds a layer of flexibility and transparency to capital management. By participating in SRT transactions, financial institutions can lower their risk-weighted assets (RWA) and unlock regulatory capital, all while keeping strong relationships with their clients.
Depending on the makeup of the portfolio and the design of the transaction, capital relief can range from 30% to 80%. With these customized solutions, allswiss empowers its partners to boost their lending capacity, improve balance sheet efficiency, and enhance long-term financial stability.
Why it Matters for Switzerland and Europe?
For SH Schweizer Hypotheken AG, SRT is more than just a compliance tool — it’s a strategic asset for its clients. As a financial services provider catering to banks, insurers, and institutional investors, SH Schweizer Hypotheken AG utilizes SRT transactions to help its partners enhance capital efficiency and bolster balance sheet resilience. This approach positions the company as a reliable ally for institutions looking to navigate a swiftly evolving regulatory landscape.
While Switzerland’s financial system is strong and well-capitalized, its close ties to the European market mean that changes in the EU — especially regarding leverage reduction and stricter capital regulations — have immediate effects. allswiss addresses this challenge by providing customized SRT structuring, advisory, and execution services that comply with both FINMA and Basel Committee standards.
By implementing these strategies, SH Schweizer Hypotheken AG empowers its clients to maintain real-economy financing — from small and medium-sized enterprises to large corporations and residential lending portfolios — all while ensuring capital adequacy. The firm’s method blends regulatory accuracy with strategic insight, making sure that every transaction not only fulfills compliance needs but also fosters long-term growth and stability.
Why SRT?
Capital Relief:
With SRT, institutions can shift specific credit risks to investors, which helps lower regulatory capital requirements and opens up room for new business opportunities. SH Schweizer Hypotheken AG is here to guide clients through the entire journey — from analyzing portfolios to structuring transactions — ensuring they achieve tangible capital relief.
Risk Mitigation:
By offloading a portion of credit risk, banks can better manage sector concentration and stabilize their performance. SH Schweizer Hypotheken AG offers risk modeling and transaction design services, helping clients create a balanced and sustainable risk profile.
Improved Return on Equity:
SRT boosts capital efficiency, enabling institutions to enjoy improved returns on equity without having to expand their balance sheets. SH Schweizer Hypotheken AG customizes transaction structures to ensure profitability aligns with regulatory compliance.
Liquidity Management:
Well-structured SRT solutions can also enhance liquidity ratios like LCR and NSFR. allswiss weaves these elements into its advisory strategy — making sure that every transaction supports both capital and liquidity objectives.
Contact Our Expert Team Today
Reach out to SH Schweizer Hypotheken AG for securitisation platform inquiries.
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