UBS has transferred the pension liabilities of several Credit Suisse entities in Germany to Deutsche Betriebsrente (DBR) Holding, marking one of the largest pension buyouts completed in the country this year and a significant step in the post-merger integration of the two banks.
The liabilities have been moved into a newly created Rentnergesellschaft – a pension corporation – and placed within the Allianz Treuhand contractual trust arrangement (CTA) structure to ensure assets remain ring-fenced for pension administration and benefit payments.
UBS chose the buyout route as part of its broader integration of Credit Suisse, DBR managing partner Dirk Popielas told IPE.
“It was one of the largest transactions year to date in terms of size, number of beneficiaries, and complexity. The structure was complex because it covers all the history of pension liabilities accrued by Credit Suisse entities in Germany, over two decades,” he said.
The transaction allows UBS to “minimise off-balance-sheet risks”, added DBR’s chief actuarial and risk officer, Michael Kutzner, in a LinkedIn post.
The deal sits in the three-digit million range – over €100m – IPE understands.
Pension buyouts via a Rentnergesellschaft are becoming more common in Germany, particularly following M&A activity such as UBS’s takeover of Credit Suisse, as well as corporate wind-downs.
Firms adjusting their business models while carrying direct promise (Direktzusage) obligations on their balance sheets are also seeking ways to offload liabilities.
This year alone, Vedra Pensions has taken over the pension books of Hauck Aufhäuser Lampe, AST Deutschland, OWH SE and Hypo Real Estate Holding. Funding Solution has completed 11 transactions so far, including pension obligations from Wintershall Dea – owned by BASF and LetterOne – bringing its total liabilities under management to more than €500m.
“We expect an increasing number of transactions and rising volumes of individual transactions,” said Christian Remke, chair of the board of directors at Metzler Pension Management.
DBR is working on further transactions after taking on liabilities from US- and Japan-listed companies, other European corporates, including UBS, and a German firm earlier this year.
“We expect this trend to continue in the future. We see stronger appetite from corporates for buyout transactions, the market is becoming more liquid for more and larger transactions,” Popielas said.
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