|
Five banks in
the FTSE 350 have pension schemes deficits that total £1761
million, according to Punter Southall.
The largest deficit in the FTSE 350 at 31 December 2007 was HSBC
Holdings, with a surplus of £-753 million. With the rest of
the banks making up a total surplus of £1,252 million with
their schemes, the actual combined deficit is £509 million.
“There exists a significant divide between the pension schemes
of the FTSE 350 banking companies: schemes with substantial surpluses
and schemes with substantial deficits in their last published accounts,”
commented Peter Black, principal at Punter Southall.
“However, we should consider that these figures are based
on an accounting basis and that they would certainly be a lot worse
if they were considered on a funding basis – which would require
trustees to choose a more prudent basis in agreement with the company,”
he added, acknowledging that accounting instead uses a corporate
bond measure.
“In current conditions the accounting basis is highly unlikely
to be considered prudent, as corporate bond yields have increased
significantly as a result of the credit crunch. In particular, a
significant proportion of UK AA rate bonds are issued by banks and
the market view of their credit worthiness has understandably reduced
of late.”
Black concluded on a warning that this could be a continuing trend:
“Recent poor returns in the investment markets are likely
to have increased deficits further.”
The banks in the FTSE 350 which were in deficit at 31 December 2007
were Bradford & Bingley (£11 million), Lloyds TSB Group
(£683 million), Standard Chartered (£23 million), and
HBOS (£291 million). Those in surplus were Alliance &
Leicester (£53 million), Barclays (£641 million), Royal
Bank of Scotland (£552 million) and Northern Rock (£6
million).
- Pensions Age
October 2008
|
