Delivering the firm

Raising CHF 1.75 billion was both a challenge and an opportunity for the Multinationals team at UBS in Geneva. „From the outset, we felt that the project was interesting and complex, and we were confident that we would be able to manage it thanks to our expertise and our global presence,” explains Philippe Widmer, head of the team.

The client was the Canton of Vaud, one of Switzerland’s regional authorities, which needed to source CHF 1.25 billion quickly to recapitalize the regional bank, the Banque Cantonale Vaudoise (BCV). In addition, several hundred million francs were earmarked for the day-to-day running of the canton.

Francis Randin, Head of Finance for the Canton of Vaud, who supervised this refinancing, explains why his department approached UBS: „In the past we have always appreciated the creativity of the UBS team, and we had confidence in the bank’s placement power.”

In an uncertain environment, raising such a sum would be a challenge in itself. Tapping the Swiss capital market, the usual financing source for cantons, was ruled out because the size of the sum might have a potentially disruptive effect on the market.

Yet the funds were urgently needed, partly to reassure the federal authorities that Vaud could still access the markets swiftly. All this meant that capital would have to be sourced internationally but delivered in Swiss francs to avoid any additional complications for the canton.

To meet these needs, Widmer’s team drew on two key UBS strengths: the firm’s global reach and the resources it could bring to bear through cooperation between its units across the world. But before going to the capital markets to arrange financing, UBS joined forces with other investors to arrange a bridge loan.

Before the capital market transaction reached the international markets, the Canton of Vaud had to seek a Standard and Poor’s rating. Thanks to the assistance of UBS specialists, this was achieved in the record time of 12 weeks.

UBS was then able to place a bond for Vaud in several European capital markets. The denomination in Swiss francs only was a challenge in itself given the scale of the issue. Direct contact was established between UBS units in French-speaking Switzerland, London, New York and Zurich. About 50 people at UBS became directly or indirectly involved in the transaction.

The success of the transaction enabled the Canton of Vaud to obtain the funds it needed and to bolster the cantonal bank’s balance sheet. Francis Randin is very satisfied: „This kind of result can only be achieved where mutual trust is complete. UBS delivered long-term funding at favorable rates in a very short space of time. It was an exceptional performance.”