UBS Offloads £1.7 Billion in UK Pension Risk While Bern Weighs a Levy on Its Safety Net

UBS offloads £1.7bn UK pension liabilities to Legal & General while Swiss lawmakers back a liquidity backstop levy aimed at the bank alone.

UBS is pressing ahead with the unglamorous work of shrinking its legacy footprint, even as lawmakers in Bern sharpen a plan that would make the bank pay for the crisis backstop it alone would rely on.

The Swiss giant's UK pension plan struck a buy-in with Legal & General on Tuesday covering £1.7 billion of liabilities for more than 7,000 members of the UBS (UK) Group Pension Plan. As part of the arrangement, an existing longevity hedge was moved from Zurich to Legal & General — a quiet but meaningful step in offloading long-dated obligations from the group's balance sheet.

A Levy Aimed at One Bank Only

On the same day, the economic affairs committee of Switzerland's Council of States threw its weight behind a fee that would charge systemically important lenders for access to the public liquidity backstop. In the committee's own assessment, only UBS would currently fall under such a charge. The bank declined to comment when approached by Reuters.

The proposal goes beyond a simple access fee. The committee wants to broaden the assessment base considerably, pulling in bail-in debt, collateral parked with foreign central banks, and additional long-term refinancing sources alongside traditional metrics. The Swiss Bankers Association has already come out against the plan.

Washington and Bern Pull in Opposite Directions

For investors, the question is whether stricter home-market rules will erode the profitability of the combined bank, or whether relief elsewhere can offset the drag. Handelsblatt reported on October 8 on the widening gap between two regulatory regimes: while tighter Swiss requirements could lift UBS's future capital needs, the Federal Reserve's planned changes to US stress-test rules might hand the group more room to maneuver stateside.

The bank is also trimming costs on other fronts. Roughly a week ago, UBS agreed to hand over the fund administration operations of the former Credit Suisse in Switzerland and Luxembourg to Northern Trust, part of a full retreat from that business. Completion is expected in the second quarter of 2027, subject to regulatory approvals.

On the liability side, UBS said in early October it would fully repay outstanding Senior Callable Notes totaling JPY 8,300,000,000 with a coupon of 0.904%. Redemption is set for October 27, 2026.

Analysts Stay Constructive

Deutsche Bank Research kept its "Buy" rating on October 7 and raised its price target to CHF 47 from CHF 45. UBS Asset Management, meanwhile, announced a capital increase for December at its real estate fund UBS (CH) Property Fund – Swiss Residential «Anfos».

In today's session the stock edged up 0.4% to EUR 42.95, leaving it 11% below its 52-week high of EUR 48.19.

The Real Risk: A Structural Return Disadvantage

Should the backstop fee become law, UBS would face permanent extra costs as the country's only remaining major bank — a structural handicap against international peers. Layer on Bern's parallel deliberations over tougher capital requirements, and the room for buybacks or dividend increases narrows noticeably.

If the Credit Suisse integration stalls in individual segments, savings may no longer offset the regulatory cost wave, opening the door to a sustained re-rating lower. Until then, the market appears willing to treat the political noise as manageable — provided the next quarterly report shows wealth management and investment banking earnings can carry the load.