Lease financing in switzerland

LEASE FINANCING IN SWITZERLAND

Arpit Gupta, Roll No. 860Semester V, B.B.A., LL.B (Hons.)

•BRIEF BACKGROUND

• Total worth of the Swiss Leasing Market – CHF 23.2 Billion (as of December 31, 2011)• Compare this with outstanding loans from banks to

domestic firms – CHF 434 Billion.• Ranked 9 in terms of ratio of lease market to GDP. ( for

FY 12)• Was affected by the ‘Great Recession’ of 2009 –

brought business down by 32%.

THE LEASE MARKET IN SWITZERLAND – AN OVERVIEW

•WHO ARE THE ‘LESSORS’?

•PRODUCTS AVAILABLE FOR LEASING

•CAPITAL GOODS

•CUSTOMER SHARE

REGULATORY MEASURES FOR THE LEASE MARKET IN SWITZERLAND

•LEGAL PROVISIONS

• The Swiss Code of Obligations• Consumer Credit Act – deals with leasing of consumer goods

•ACCOUNTING TREATMENT

• Art. 663b, Swiss Code of Obligations (SCO)• Swiss Accounting and Reporting Recommendations (ARR), along with US-GAAP (General Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) •Distinction between treatment of an operating lease and financial lease.

•ACCOUNTING TREATMENT

•When is a lease to be treated as a financial lease?• Transfer of ownership• Residual payment significantly less than the market value• Lease period is almost equal to the useful life of the asset leased• Present value of lease payments vis-à-vis cost of acquisition/market value

COMPARATIVE ANALYSIS WITH OTHER COUNTRIES

•MARKET PENETRATION

• Ranked 10th, in terms of market penetration of equipment leasing.• 10.9% - below the European average of 12.3%.•However, market penetration by itself is not a good enough indicator of the extent of equipment leasing taking place in Switzerland.

•MARKET PENETRATION

•RATIO OF LEASE FINANCING AND GDP

THANK YOU

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