SWITZERLAND - Swiss bank UBS has altered the way it presents its pension assets within its official accounts and increased the group’s assets by CHF1.6bn (€1.07bn) in the process.julie.henderson@ipe.com

The terms of International Accounting Standards’ rule IAS19 allow a company to ‘activate’ assets from a pension plan and change their presentation in its balance sheet - a right UBS has decided to apply for the first time in its 2008 accounts.

“In third quarter 2008, UBS concluded that it meets the requirements in IAS19 Employee Benefits to recognise a defined benefit asset associated with its Swiss pension plan,” stated UBS in a note to its accounts.

“Under IFRS these assets, which have previously been accounted for under ‘unrecognised assets’, can be activated,” said a spokeswoman.

The bank stressed the Pensionskasse is recognised as a separate foundation to UBS as a corporation, so the increase in assets for the group is an “accounting effect”.

“The CHF1.6bn are not a transfer or a credit from the Pensionskasse to UBS and the financing of the fund is in no way affected by it,” said the spokeswoman.

“Under the IFRS accounting standards used by UBS the bank is obliged to ascertain whether there is a an asset or a liability from Pensionskassen schemes in the group’s accounts and this has to be accounted for respectively,” she added.

UBS was not willing to comment on why the change in the accounts was made at this point in time but a market source told IPE it might have been a reaction to IFRIC 14 which was much debated last year when it came into effect. (See earlier IPE article: IASB clarifies IFRIC application)

The expert also confirmed while UBS had not used the possibility of recognise these assets under IAS19, so far, it has now done so to allow it to reflect the entire prepaid pension asset.

UBS noted in its 2008 accounts officials had “concluded that recognition of an asset should also consider unrecognised net actuarial losses and past service cost as permitted by IAS19 as this results in a better reflection of the corridor approach”.

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