The Swiss pension funds of Credit Suisse and UBS are set to remain independent entities for the time being, following the announcement of UBS’s takeover of the former, as the banks seek competition clearance in further jurisdictions beyond Switzerland.
In a statement issued yesterday, the Pensionskasse of Credit Suisse said the takeover does not have an impact on its independent operational business activities. It added that employees entitled to pension benefits are not at risk.
Asked about the consequences of the acquisition on both pension schemes, a spokesperson for UBS told IPE that currently the situation is still fluid and changing to provide details, but the bank will seek to inform the market as it continues with its integration process.
In internal memos sent to staff at Credit Suisse on job cuts, published by Bloomberg, the bank underlined that the terms of employment won’t change until the transaction is completed, and pension contributions will continue to be made, adding that the pension funds are secured under the Pensionskasse and industry regulations.
However, according to the Swiss Association of Bank Employees (ASIB), the situation for employees, especially at Credit Suisse, is “dramatic”, with many jobs at risk following the takeover announcement of the takeover by UBS.
Natalia Ferrara, ASIB’s managing director, told IPE that there was job uncertainty reigning over employees because it was not yet clear what this new “mega bank” will do going forward.
The association is demanding support particularly for older employees (over 55) in case of layoffs, through an early retirement option that the banks should finance so that employees won’t bear financial losses in the Pensionskasse, she added.
It is also demanding a task force with the involvement of the authorities and the association representing the interests of the banks as employers – Arbeitgeber Banken – to overcome this situation, Ferrara said, adding that the employees’ association is in talks with both Credit Suisse and UBS on the matter.
Waiting for the latest results
Credit Suisse stressed in its statement yesterday that the pension fund is in a “very robust financial position”, with a funding ratio of almost 130%, fully accumulated fluctuation reserves, and an unrestricted risk capacity.
This is also reflected by the high interest rate on retirement assets of 6.5% in 2021 and 5% in 2022, it added.
The Pensionskasse recorded a funding ratio of 130.9% and unrestricted risk capacity, according to the financial statement for 2021.
Credit Suisse declined to comment on its latest returns, saying that it will publish an updated financial statement in April.
The UBS pension fund has recorded an economic funding ratio, meaning the share of its liabilties covered by its assets, of 130.1%, with a discount rate corresponding to Swiss bond yields.
It also recorded a technical funding ratio, the ratio between assets and liabilties calculated by discounting promised benefits using the technical interest rate, of 121.8% (discount rate 0.5%), as of 31 January 2023, the bank said.
The pension fund has assets under management of CHF28.4bn (€28.6bn), recording a year-to-date performance on assets invested of 2.3%, it added.
Credit Suisse’s scheme, which has total assets worth CHF17bn, achieved returns of 2.35% in January 2023. It caters for over 17,000 bank employees and its subsidiaries, paying out benefits to over 10,000 pensioners. In addition, it also manages Pension Fund 2 and the Hardship Fund of Credit Suisse Group in Switzerland.
Since 2021 the pension scheme seems to have dropped in total assets and in membership. According to its 2021 financial statement, it had assets worth CHF19.4bn, almost 18,000 active members and around 11,000 pensioners on its books.