SWITZELAND'S HORN OF PLENTY OR ICY BLAST?
When the Swiss National Bank blew its Alpenhorn, the walls protecting bank syndicates in the public bond market trembled and looked ready to fall.
Overnight on May 29, the SNB abolished the distinction between public issues and private placements. The Big Three Swiss banks have always insisted on fixed membership of their public issue syndicates: they were less fussy about private placement syndicates.
It was a small step by the central bank, but in theory it allowed any bank, even a member of the mighty syndicate controlled by the Big Three, to join any other syndicate for any denomination and any maturity of bond beyond 18 months.
For the Big Three -- Union Bank of Switzerland, Swiss Bank Corporation and Credit Suisse -- it offered a chance to extend their syndicate control into the vacuum left by the private placements. But the game may go the other way. The loose syndicate structure of the private placement could be carried into the public domain.
Certainly the suddenness of the move caught the banks on the hop, especially the Big Three, which control 70% of the public issue market.