Swiss pension funds are facing a narrowing range of global custody, consulting and asset management services as UBS strengthens its grip on the market following its 2023 takeover of Credit Suisse.
The provision of global custody services to pension funds is shrinking, according to an analysis by BAK consultancy conducted on behalf of the Swiss State Secretariat for Economic Affairs (SECO).
BAK surveyed pension funds as bank clients on fees, quality and availability across services, including passive and active asset management mandates, fund management, real estate and strategic consulting.
High fixed costs are the biggest barrier to new banks entering the market to offer global custody and passive asset management services. Around three-quarters of pension funds surveyed expect this to have a massive or severe impact, the study found.
Half of pension funds also report that the number of banks offering passive asset management mandates has declined since the collapse of Credit Suisse.
Switching global custody or fund management banks typically leads to higher costs for pension funds, while fee differences remain relatively moderate in passive asset management and Swiss real estate mandates.
Some pension funds also observe a deterioration in strategic consulting and in services related to interest rate hedging provided by banks, according to the study.
In asset management, the collapse of Credit Suisse has increased concentration in listed real estate funds at UBS, according to PPCmetrics chief executive officer Stephan Skaanes.
“Initially, there was less competition for passive products, but several new providers have since entered the market, and competition has returned. In particular, we see that the price level, especially for indexed products, remains very competitive in Switzerland,” he said.
Overall, the loss of a provider reduces choice for pension funds, but there are still enough professional providers – both Swiss and international – in global custody and fund administration to sustain competition, Skaanes added.
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