UBS and Nomura have followed Credit Suisse in pulling out of the longevity swap market, citing capital requirements and regulatory changes, PP understands.
Sources at Swiss bank UBS said it had decided to concentrate on less capital intensive business and move away from complex long-term transactions following a strategic review.
They added that capital requirements imposed on banks by Basel III regulation had been a key factor in the decision.
PP understands that Nomura - which put together a team to enter the market last summer - is also no longer offering longevity swap quotes, but a spokeswoman for the Japanese bank could not confirm this.
With Credit Suisse moving away from the market last year after completing a £1.7bn swap with ITV (PP Online, 22 August 2011) this means three banks have quit the market in the last six months.
Hymans Roberston senior liability management specialist James Mullins commented: "This is just a function of the fact that the longevity swap market is quite new and it's a tough market to break into - the supply side is still as competitive as ever."
Indeed, as banks have been quitting the marketplace, more reinsurers have come on the scene - with French firm Score, US company Prudential and Munich Re all making moves in the last year.
"What's key is that pension schemes are increasingly demanding an insurance wrapper on these swaps and the remaining providers - with the exception of J.P. Morgan - all offer that," said Mullins.
"Insurance companies have to set aside reserves to back up their commitments, and are protected by the financial services compensation scheme, so schemes get an extra layer of protection."
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