Raiffeisen launches SARON products
St.Gallen - Raffeisen is to become the first Swiss retail bank to launch a mortgage product and loan based on the SARON reference interest rate. During periods of market turbulence, SARON is regarded as offering greater stability.
According to a press release, Raiffeisen is to launch a new form of mortgage product and loan, which will both be based on the SARON (Swiss Average Rate Overnight) reference interest rate. According to the information available, the bank is seeking to respond to the pending replacement of the CHF Libor interest rate.
In contrast to the CHF Libor, the SARON reference interest rate is based on actual transactions on the Swiss money market. According to information from Raiffeisen itself, SARON is fundamentally more stable and generally less volatile during periods of market turbulence. Moreover, as a rule, customers tend to benefit from the lowest market interest rate.
The press release explains that the SARON reference interest rate was actually established back in 2009. At this time, the Swiss National Bank (SNB) was looking to develop CHF reference interest rates for the financial markets in conjunction with the SIX Group. Since June 2019, the SNB has additionally used the SARON as its key rate.
“We moved early to intensively deal with the SARON introduction. In retrospect, this decision has proven its worth. A clear project and product strategy made a decisive contribution to the success of the project”, states Philipp Ackermann, Head of Treasury at Raiffeisen Switzerland, in the press release.