SWITZERLAND - The two largest Swiss banks said they were confident about the future of their pension funds despite falling covering ratios and job cuts and a report warning of future cuts.

According to the study, The Swiss Banking Industry in the year 2010, conducted by consultancy Accenture and the University of St.Gallen, Swiss banks were set to reduce their workforce in the immediate future as they “fall upon hard times”. But the spokesmen of the country’s two major banks, UBS and Credit Suisse, told IPE the banks were confident about their pension funds.

A UBS spokesman said the Swiss law demanded that dismissed employees were given back their accrued pensions, which could be paid into their next employer’s pension fund or in a bank account of the employee’s choice. The amount of capital given back is calculated considering length of employment, experience and function.

He said UBS, whose pension fund is worth SFr17.6bn (€11.3bn) had dismissed 5% of its workforce between 2002 and 2003, bringing the number of employees from 27,972 in 2002 to 26,662 at the end of 2003.

The spokesman declined to disclose the amount paid back to employees, but said the fund’s covering ratio in 2003 was 119.2%, up 7.2 percentage points compared with 2002.

A spokesman for Credit Suisse, which has dismissed 10% of its workforce - from 20,800 to 18,700 employees, told IPE he was confident about the future of the bank’s SFr8.5bn (€5.6bn) pension fund, whose covering ratio was 112%. “ We are very well capitalised and have a good covering ratio,” he said.

The banking report said the industry was facing further threats. “In the past three years Swiss banks have fallen upon hard times compared with the previous boom years. Overnight the overstaffing and inefficient operating processes of the banks became apparent.

“Heavy pressure on costs has led to a reduction in the number of jobs in the banking sector. In addiction, the higher level of the salaries in the banking sector, compared with those paid in the industry, is being questioned more and more.”

The survey also reveals that 83% of panellists expects the number of banks, which according to the Swiss National Bank was around 840 in 2002, to fall to an estimated 730 in 2010 - a decrease of 12%. The report was based on a survey conducted on 180 members of the management committees of Swiss banks, between September 2003 and February 2004.