Friday people roundup

first_imgEuropean Private Equity and Venture Capital Association, Schroders, BNP Paribas Securities Services, KPMG, Convictions Asset ManagementEuropean Private Equity and Venture Capital Association (EVCA) – Anne Glover, chief executive and co-founder of Amadeus Capital Partners, has been appointed chairman at the EVCA. She succeeds George Anson of HarbourVest Partners.Schroders – Karine Szenberg has been appointed country head for France at Schroders, effective September 2014. She joins from JP Morgan Asset Management, where she was head of France for more than nine years.BNP Paribas Securities Services – Anne-Sofie Strandberg and Steve Payne have been appointed as business development managers for Sweden, Denmark, Finland and Norway. Strandberg joins from Citi, where she was head of securities and fund services for Sweden, based in Stockholm. Before then, she was head of relationship management for securities services at Swedbank. Payne was previously regional business manager for client development at BNP Paribas Securities Services in London and has now relocated to Stockholm. KPMG – Adam Davis has been appointed to the Insurance Solutions team. He joins from Metlife UK, where he was head of pricing and product development.Convictions Asset Management – Nicolas Duban has been appointed chief executive, with responsibility for the company’s development strategy. Philippe Delienne will continue to serve as president and be in charge of asset management activities.last_img read more

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BT Pension Scheme transfers £16bn of longevity risk in mammoth deal

first_imgRe-insurers only transact with insurance companies or banks.The scheme then transferred the longevity risk to its subsidiary before re-insuring this with PICA, with the policy forming part of the scheme’s investment portfolio.Arrangements for the transaction started around two years ago, when the scheme explored available options to reduce the levels of risk.Frank Naylor, CIO at BTPS, said the traditional methods of using insurance companies, which then in-turn re-insure their risk, did not provide enough capacity for the BTPS to achieve value.“Because of the size of the scheme, traditional routes were never going to be enough scale to make a difference,” he said. “So we creatively thought about how to access the re-insurance market more directly.”The subsidiary insurance company can also be used to reduce longevity risk further in future.PICA won a competitive tender after pitching against six other rivals, with appetite for longevity risk allowing the BTPS to go as high as £16bn, despite originally planning less.Chairman of trustees for the scheme, Paul Spencer, said the BTPS was delighted with how the arrangement worked.“The transaction significantly reduces risk and provides enhanced security for members,” he said.Ian Aley, senior consultant at Towers Watson, who advised the trustees on the deal, said that, while pension schemes are turning their attention to longevity risk, appetite from re-insurance markets is substantial.The need for re-insurers to take on longevity risk comes from a legacy of taking on large amounts of mortality risk, with the addition of longevity risk creating capital efficiency.Longevity risk now plays a larger part of scheme risks, given the de-risking nature in investment portfolios.However, a deal of this size again is unlikely given the lack schemes able to shift such huge amounts of risk in single transactions.“The approach of establishing their own insurers made sense because the BTPS understands the investment techniques involved and because the transaction was so large,” Aley said.“We do not expect this to become the standard template for transferring longevity risk.”Aley said predictions for a £30bn market in 2014 for longevity swaps and bulk annuities now seemed insubstantial given the deals seen in the first half.The previous record for a longevity swap was set by the Aviva Staff Pension Scheme, which transferred £5bn of risk to Swiss Re, Munich Re and SCOR Global Life, using its insurance company sponsor as an intermediary.Other de-risking deals seen in 2014 include buy-ins between the Total UK Pension Plan and Pension Insurance Corporation worth £1.6bn, and a £3.6bn deal between the ICI Pension Fund, Legal & General and UK insurer Prudential.Matt Wilmington, partner at Aon Hewitt, which advised BT, the scheme’s sponsor, said: “We have been talking for a number of months about the increasing capacity and appetite of the global reinsurance market to take on pension fund longevity risk.“Transactions like this and Total’s buy-in, where all of the longevity risk was immediately reinsured, serve to underline the scale of capacity available.” The BT Pension Scheme (BTPS) has insured 25% of its longevity risk as re-insurers continue to favour the UK market, with deals breaching the £20bn mark (€25bn) in 2014.US-based life insurer Prudential Insurance Company of America (PICA) will re-insure £16bn of longevity risk in a record deal more than three times larger than the previous.A longevity swap sees a scheme make regular payments to an insurance company based on expected mortality rates, with the insurer or re-insurer making payments back equal to payable pensions, thus taking on actual longevity risk.In a novel approach, the BTPS created a wholly owned insurance company subsidiary, allowing the scheme to access the re-insurance market directly and avoid paying fees to intermediary firms.last_img read more

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IPE Views: What governments should do with financial markets

first_imgThe creation of the US EXIM bank is a clear case in point. As Shah argues, financing and risk-taking in connection with international trade or cross-border investment is the ordinary stuff the financial industry does. The self interest of financial firms will produce these services. There is no case for the government to subsidise exporters – but, even if that were desired, there are more efficient ways to do this rather than subsidised credit, a view that I would also certainly agree with.Shah characterises the Indian Financial Code as having nine components, and it is interesting to see how these look in a European context. The first is consumer protection. Financial firms, left to themselves, will mistreat consumers. This is the heart of how regulators should think about financial economic policy. Europe seems to have taken this on board with gusto since the problem that many perceive is too much EU legislation along these lines.Second is micro-prudential regulation. Left to themselves, financial firms will take on too much risk and fail too often, which will hurt unsophisticated consumers and impose externalities upon bystanders. The imposition of Solvency II, Basel II and MIFID, etc, certainly ensures Europe cannot be accused of a failure to try. But the consequences may not have been fully thought through.Third is what Shah calls resolution. The ordinary bankruptcy process does not work for financial firms, where failure can be disruptive. The government is required in the field of resolution to identify financial firms that are not viable before they are insolvent and gracefully handle the situation in ways that don’t hurt innocent bystanders and protect unsophisticated consumers. Europe is still struggling to find an effective way to put this in place. But the problem is that it will take another crisis to test whether it works.Fourth is systemic risk regulation. As Shah points out, this is about seeing the woods and not the trees. Financial regulation inevitably induces pro-cyclicality, and we need ways to combat this. We need ways to reduce the probability of systemic crises, and better ways to deal with them when they do come about. The reaction to the global financial crisis by European regulators is a case in point. Imposing draconian capital rules on holding risky assets forces investors into holding excess sovereign debt at a time when QE is forcing bond yields down, giving rise to unprecedented negative yields. Meanwhile, markets such as the European ABS market, which could provide a stimulus to European recovery, are unduly penalised. Europe clearly has not found a holistic approach to this that works.Fifth, Shah sees India as requiring a public debt management agency that will do investment banking for the government and figure out the right ways to organise the market for government bonds. In the European context, the arguments over the extent of mutual support for government debt lie at the heart of the euro-zone crisis.Sixth, India has capital controls, and Shah sees the need for the rule of law, and equal treatment of non-residents, in the working of capital controls. In the European context, so far, that is not relevant, but if Greece defaults whilst remaining within the euro-zone, such issues may come to the fore.Seventh, Shah argues that monetary policy is also a key activity of the state, with an accountable central bank that will safely produce fiat money, through a sound monetary policy process. Whether in the European context, the ECB is doing that through its QE programme is up for debate.The eighth activity for Shah is the use of finance as a tool for development and redistribution, whilst Shah’s ninth activity is in the legal framework that underlies financial markets, covering contracts, trading and market abuse. These again are well covered in Europe by the plethora of regulations.With the UK looking to renegotiate its relationship with the EU, whilst Greece at the other end is desperately struggling to stay in, debating what governments should and should not be doing in finance may be essential to finding a workable compromise.Joseph Mariathasan is a contributing editor at IPE The debate over what governments should and should not be doing in finance is more important than ever, says Joseph MariathasanWhat should be the role of governments in financial markets? There is no right answer, and attitudes can vary with the circumstances and with your politics. The US Export-Import Bank, for example, is likely to lose its charter on 30 June, having served the interests of US industry since president Franklin D Roosevelt established the agency in 1934. Whether you regard the EXIM Bank as an extension of crony capitalism that provides corporate welfare for big business, or a worthwhile entity that helped boost US exports by nearly $28bn (€25bn) and supported more than 160,000 domestic jobs last year alone, depends on your ideological stance.Ajay Shah, an Indian economist and a keen advocate of the benefits of free markets, makes some points in the Indian context that should also resonate in Europe, both at the national and EU level. Shah believes the job of government is to address market failures in areas such as public goods, asymmetric information, market power and externalities.It is difficult to argue with this, but where there is debate is how much of a focus there should be on welfare programmes, which is the inevitable consequence of universal suffrage. But that leaves a class of issues where the government is doing something that is not grounded in market failure and does not have political importance.last_img read more

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Friday people roundup

first_imgEuropean Parliament – The economic and monetary affairs committee (ECON) of the European Parliament has appointed Kay Swinburne, of the European Conservatives and Reformists group, as co-rapporteur on the legislative file on the recovery and resolution of central counterparties. The European Commission in early December published a legislative proposal for a regulation on this issue. Swinburne was the rapporteur on the own initiative (non-legislative) report that was the precursor to the legislative report.Hedge Fund Standards Board – Luke Ellis, chief executive at Man Group, and Henry Kenner, chief executive and founder of Arrowgrass Capital Partners, have been appointed to the board. The HFSB – the global standard-setting body for the alternative investment industry and custodian of the Hedge Fund Standards – also announced that it was forming a working group on liquid alternatives. Edmond de Rothschild Group, Swiss Life Asset Managers, The Pensions Regulator, European Parliament, Hedge Fund Standards Board, Man Group, Arrowgrass Capital PartnersEdmond de Rothschild Group – Vincent Taupin has been named head of the global asset management division, following the resignation of Roderick Munsters. Munsters quit the firm “for personal reasons”, the Edmond de Rothschild Group said in a statement. He had been in charge of the asset management group for just seven months, having succeeded Laurent Tignard in May. Taupin will take on the new role from 1 January. He was previously chair of the executive board of Edmond de Rothschild’s French operations. The company has also appointed Didier Deléage as chief executive of Edmond de Rothschild Asset Management (France). He is currently global COO for the asset management firm.Swiss Life Asset Managers – Michael Klose is to become chief executive of third-party asset management at Swiss Life Asset Managers as of 1 January 2017. He succeeds Thierry Van Rossum, who in future will be concentrating entirely on his function as CIO of Swiss Life France and will continue to serve as chief executive at Swiss Life Asset Management (France).The Pensions Regulator (TPR) – Three non-executive directors have been appointed to the UK regulator’s board. Kirstin Baker will join on 1 February 2017, followed by Robert Herga on 1 July 2017. David Martin is being re-appointed on 1 February, following an open competition. The appointments are for four years and four months. They fill vacancies created by the departures of Graham Mayes and Ann Berresford, whose terms of office come to an end in 2017.last_img read more

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Dutch retailer scheme doubles mortgages allocation, cuts private equity

first_imgThe €4.3bn Ahold Pensioenfonds is to increase its stake in residential mortgages from 3.2% to 7.5% during 2017, as part of a wider asset allocation shift.The scheme, for employees of the Dutch retail conglomerate Ahold, is also seeking to divest from private equity and unlisted real estate in a bid to simplify its portfolio.Commenting on the scheme’s annual report for 2016, John de Waal, the pension fund’s financial and risk manager, said it considered residential mortgages “a safe investment, which generates better returns than government bonds”.Last year, the pension fund’s residential mortgages allocation yielded 7.8%. In part to finance the increased stake in mortgages, the Ahold scheme has raised its cash position to 7.4%, largely using the proceeds of a renewing of its interest rate swaps.It indicated that it also needed additional liquidity for the transition to cleared swaps under the European Market Infrastructure Regulation. As a consequence, it had ceased securities-lending of European equity and bonds, it said.De Waal, who is also executive trustee in the scheme’s new one-tier board, said that the pension fund had also started divesting its non-listed property in favour of listed real estate.“Non-listed property offered insuffient added value,” he said. “Moreover, we also want to keep our portfolio as simple as possible.”Ahold Pensioenfonds has also started divesting its 2.3% private equity allocation, as the scheme lacked the necessary expertise and extra returns did not outweigh the risks, according to de Waal.The annual report showed that returns on private equity averaged 11.7% a year since 2010, 1.8% above average equity yields. In the opinion of the pension fund, however, the extra returns should be at least 3% above average yields.The Ahold Pensioenfonds reported an overall result of 10.7% last year, with its 60% interest hedge contributing 4.6%. However, its currency hedge lost 0.3 percentage points and its interest rate hedge on US credit lost 0.1 percentage points, following falling rates.Among its best-performing asset classes were high yield bonds (17.1%) and emerging markets equities (15.8%).Last year, the Ahold Pensioenfonds spent 35 basis points (bp) on asset management, including 8bp on transactions.Its coverage ratio improved to 105.3% as at the end of March.last_img read more

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Hedge funds have ‘considerable’ liquidity buffer, global assets hit $3.2trn

first_imgHedge funds have a “considerable” liquidity buffer on an aggregate level with which to manage investor redemptions, according to a survey by the International Organization of Securities Commissions (IOSCO).However, the organisation’s fourth biannual survey of the sector reported that there may still be liquidity mismatches in underlying funds.IOSCO said the survey data suggested that, in normal market conditions, hedge funds should be able to meet investor redemptions through the orderly liquidation of assets. This was because at an aggregate level portfolio liquidity exceeded investor liquidity by a wide margin across different time periods (see graph, below).“That aggregate view may provide some comfort at a systemic level, but it would not necessarily highlight liquidity mismatches within the underlying funds that make up this aggregate,” added IOSCO. As of 30 September last year, 3.8% ($121.6bn, or €108.3bn) of hedge fund assets had constrained investor redemptions through the use of liquidity management tools, such as gates, suspensions, or side pockets.Average hedge fund liquidity profile#*#*Show Fullscreen*#*# Source: IOSCOAssets managed by hedge funds increased by 24% between September 2014 and 2016, according to the survey. As at the end of September 2016, global assets under management stood at $3.2trn.The increase could reflect a combination of more widespread reporting across jurisdictions, market performance, and net fund subscriptions, but this was not conclusive from the data, IOSCO said.Other key findings included that the Cayman Islands continued to be the fund domicile of choice with more than half of hedge fund assets based there. Equity long/short was the most widely used investment strategy, followed by global macro and fixed income arbitrage.IOSCO also noted that a prominent trend in Europe in recent years was the emergence and growth of “liquid alternative funds”, which pursue similar strategies to hedge funds but offer daily or weekly redemption terms to investors.Generally structured as UCITS, these funds had grown in number and in total assets. According to data from Morningstar, for example, there were some 1,500 liquid alternatives funds in the EU in 2016, compared with 1,000 in 2014.The survey, which was first carried out in 2010, has become an important resource for regulators given a lack of public and global data on hedge fund activities, said the Madrid-based standard setter. It noted that data collection had expanded due to enhanced regulatory reporting regimes in some jurisdictions and fewer legal constraints around the use and sharing of data.The report can be found here.last_img read more

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Swiss corporate pension funds slash conversion rates, study shows

first_imgHeadquarters of the SIX Swiss stock exchangeThe expected pension of an employee who was currently 25 years old would be around 3.1 times higher than the prescribed legal minimum if he or she was contributing to the best plan. If the employee worked at the company with the worst plan, the pension would be only 1.3 times higher than the legal minimum, according to Willis Towers Watson. This discrepancy grew with age, income and the amount of vested benefits when joining a pension fund.The technical interest rates used by corporate pension funds varied from 1.75% to 3%, and were noticeably lower than in the consultancy’s 2015 study.The technical interest rate (technischer Zins or taux téchnique) determines the return on capital for pensioners. The conversion rate, another key parameter in Swiss pensions (Umwandlungssatz, taux de conversion), determines the pension a member is entitled to upon retirement. All else being equal, a lower conversion rate means a smaller pension.“In reality, there is a redistribution from active members to pensioners.”Eileen Long, senior consultant at WTWEileen Long, senior consultant at Willis Towers Watson, said it was interesting to compare the technical interest rate with the return credited to active members’ capital. “Ideally they would be identical,” she said. “In reality the former tends to be higher, which means there is a redistribution from active members to pensioners.”However, many pension funds last year were able to provide active members with a return above the legal minimum – 1.69% as opposed to 1.25%. This was due to generally good returns and a stable financial situation. However, a wide spectrum – ranging between 0.75% and 2.75% – showed how different the individual pension solutions were in practice, the consultancy saidThe conversion rates for the non-mandatory portion of active members’ accumulated assets had also fallen, Willis Towers Watson said.  They ranged between 4.7% and 6.4%. Such large spans were in evidence from previous studies, but the minimum and maximum values had fallen sharply, according to the consultancy. This was also the case for the average conversion rate upon retirement at the age of 65, which had continuously dropped over the past few years. Only 17.4% of all companies in the SLI still used a conversion rate of more than 6%.“There are different approaches to tackling declining investment returns and higher life expectancy,” said Daniel Blatter, consultant at Willis Towers Watson. “However, the trend towards falling conversion rates is in evidence [at all corporate schemes] and leads to lower retirement benefits.” A 25-year old in Switzerland today would be set for a corporate workplace pension five percentage points lower than that of a compatriot only a few years older, according to a study by Willis Towers Watson.It found that retirement benefit levels were falling although contributions were, on average, increasing.The consultancy’s Swiss arm regularly carries out a benchmarking study of the pension plans of companies making up the Swiss Leaders Index (SLI). This comprises the issuers of the 30 largest and most liquid securities in the Swiss equity market. Companies such as ABB, Julius Baer and Nestlé are currently in the index.Willis Towers Watson’s 2017 study covered 23 of the 30 companies in the SLI. According to the consultancy’s study, there were significant differences between individual corporate pension funds and their sponsors in relation to various factors. This led to significant performance differences, so that the retirement benefits of one corporate pension fund could be worth only half those of another.last_img read more

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GAM to liquidate absolute return bond funds following redemption requests

first_imgFor those investors wishing to retain exposure to the strategies, GAM said it was “working on establishing alternative structures”.Haywood was suspended after an investigation found that he failed to demonstrate adequate due diligence regarding investments made in the strategies. In addition, GAM said Haywood “may have breached” company policy by failing to obtain two signatures on “certain contracts”. The manager also breached policy regarding gifts and entertainment, and used his personal email for work purposes.GAM added that it had not discovered any “material client detriment” during its investigation but the situation remained “under review”.The company also highlighted that there was “no evidence that Haywood was motivated by an improper rationale… or that there was any conflict of interest between him and clients”. In addition to the absolute return bond funds, Haywood also worked on trade finance portfolios worth CHF2.9bn and other fixed income strategies worth CHF653m. These were not affected by the investigation, GAM said.Investment directors Jack Flaherty and Alex McKnight were jointly placed in charge of the absolute return bond strategy following Haywood’s suspension.There have been no changes to the investment process and philosophy behind the funds, and no other GAM strategies were affected, the company said.Zurich-based GAM ran CHF163.8bn in total as of 30 June, across equities, bonds, multi-asset portfolios and hedge funds. Swiss asset manager GAM is to liquidate nine unconstrained and absolute return bond funds worth CHF7.3bn (€6.3bn) after dealing was suspended in the wake of a manager’s suspension.Tim Haywood was suspended on 31 July after an internal investigation identified problems with his risk management and record keeping. Dealing in the funds was subsequently halted after a large number of investors attempted to pull out of the strategies.In a letter to investors dated 10 August, Tim Rainsford, group head of sales and distribution, said the company had decided to liquidate the strategies, which would “allow investors the opportunity to receive proceeds in a more timely manner and ensure equal treatment”.“It is expected that all fund shareholders will periodically receive their proportionate interest in cash as it becomes available throughout the liquidation process subject to any necessary approvals,” Rainsford wrote. “GAM is working with each of the fund boards to maximise liquidity and value for investors.”last_img read more

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Analysis: European Commission rejects Italian budget plan

first_imgItaly’s populist government is intent on keeping its promises of higher spending, after the European Commission (EC) rejected its draft budget plan.The government, in power since June, wants to raise spending to finance lowering the retirement age and provide a universal benefit to the unemployed. The draft also implies an increase in the country’s budget deficit, which has put Italy on a collision course with the Commission and financial markets.The EC rejected the budget on the grounds that it deviates from previously agreed deficit reduction targets and, according to the Commission, endangers Italy’s debt position.The rejection means the Italian government has three weeks to present a new draft or face further action from the Commission, which could include the enforcement of an excessive deficit procedure. This would entail fines for Italy, uncertainty over its financial stability and a wave of market volatility. Source: Presidenza Della RepubblicaItaly’s government, appointed earlier this yearOne of the largest items in the draft budget is pension reform. The government’s coalition partners, the Five Star Movement and the League, had promised to roll back the Fornero pension reform of 2011, which raised the state retirement age in an effort to secure Italy’s public pension system.The draft budget foresees spending increasing by €8bn next year. This will allow over 400,000 people to retire once they have reached 62 and contributed to the system for 38 years, as opposed to the current retirement age of 67.The government also plans to reduce pension benefits of more than €4,500 per month, making sure they are in line with contributions.The government has earmarked €7bn to provide a ‘citizen’s income’ to the unemployed and the poor. It is forecast that 5m people will be eligible for this benefit.The budget also includes a tax cut to small businesses and self-employed workers. Funds have also been allocated to grant an amnesty for unpaid taxes to citizens deemed unable to pay.Spending planThe government plans to spend money on infrastructure and security. While the draft budget includes some saving measures, the emphasis is on spending. There is speculation that the measures will not foster economic growth but merely add to the country’s huge debt pile. Earlier this month, after tense discussions, the coalition government agreed on a budget deficit target of 2.4% of GDP. This is broadly in line with last year, but higher than the 0.8% recommended by the European Commission.#*#*Show Fullscreen*#*#center_img Source: Italian finance ministryGiovanni TriaFinance minister Giovanni Tria has defended the budget, emphasising that the measures will boost growth and reduce the debt-to- GDP ratio, which currently exceeds 130%.However, commentators have highlighted that the GDP forecasts used are optimistic. If growth does not materialise, the debt-to- GDP ratio could increase dangerously.The draft was submitted to the EC earlier this month amid bitter exchanges between Italian and EU politicians.Commission president Jean-Claude Juncker was quoted as saying that the Commission was unlikely to make concessions to Italy. Commission vice-president Valdis Dombrovskis and commissioner for economic and financial affairs Pierre Moscovici responded by highlighting breaches of EU targets.The Italian government has clearly signalled that it does not intend to review its spending plans before presenting the draft budget law to parliament.According to Italian law, policymakers have to approve the budget law by the end of the year. While the country has entered uncharted territory, the government has assured that it does not plan an exit from the euro and the European Union.Alessio de Longis, portfolio manager for the global multi-asset group at OppenheimerFunds, says: “Italy has a buffer through the primary surplus and the current account surplus. These conditions mean the Italian debt situation is not explosive.“However, the country is planning to do fiscal expansion next year and no fiscal tightening for the following two years, while there is a high probability that we are facing a very pronounced slowdown in global growth. That is when we would need to do fiscal expansion.”Market reactionInvestors did not take kindly to this prospect. An aggressive sell-off of Italian government bonds over the past two months has sent the spread between Italian 10-year government bonds (BTPs) and German Bunds well past the 300-basis-points level, a level not seen since Europe’s sovereign debt crisis – prompting speculation that Italy would be plunged into a new crisis.Bond prices rebounded after Moody’s downgraded Italy’s sovereign debt to one level above ‘junk’ status but have remained volatile for the past week.De Longis adds: “If markets maintain a negative view of this budget, spreads could continue to widen. That increases cost of debt and tightens financial conditions for banks, creating a negative feedback loop that could affect the economy itself. This is even before fiscal expansion is enacted.”Danilo Verdecanna, Italy country manager at State Street Global Advisors, says: “The yield on 10-year BTPs does not entirely reflect the uncertainty surrounding the budget. The market is still affected by the European Central Bank’s quantitative easing programme.“Italian banks have also stepped in to buy domestic sovereign debt to compensate the sell-off. In normal market conditions, spreads could be much wider, and the sustainability of government debt would come into question.”He adds that “rising yields could also trigger instability within the banking sector, since banks invest so heavily in government paper”.The tussle between Italy and the Commission is likely to be one of the strongest factors driving European markets over the next few months.last_img read more

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​Nordic investors steer clear of Cayman Islands after tax blacklisting

first_imgHe added: “That does not mean that we are able to change the investments that have been made in the past and it is important to underline that we haven’t engaged in any aggressive tax planning via our investments on Cayman Islands.”The blacklisting did not change that fact, he said.“That being said, we are in dialogue with business partners about some of the investments in the jurisdiction,” said Toft.The country’s second biggest pension fund, the commercial provider PFA, took a similarly firm line when asked by IPE.“PFA has been actively involved in the EU’s blacklist on an ongoing basis,” a spokesman said, adding that it was the firm’s policy not to invest in holding companies located in countries on this list at the time of investment.“The fact that Cayman Islands is now on the list has the logical consequence that PFA will not make investments in holding companies located in the Cayman Islands as long as the Cayman Islands are listed, he said.“We are not making any new investments through Cayman Islands as long as they are on the tax haven blacklist”Hans Sterte, CIO at AlectaSweden’s largest pension fund Alecta is also taking an immediate stance on the change, according to CIO Hans Sterte.“We are not making any new investments through Cayman Islands as long as they are on the tax haven blacklist,” he said.Danish labour-market pension fund Sampension said that according to the rules it had set for itself on responsible tax practice, it distanced itself from investments in jurisdictions on the EU blacklist or those assessed by the OECD’s Global Forum on transparency and exchange of information for tax purposes as non-compliant or partially compliant.However, its rules also state that such an investment was not excluded where there was considered to be very limited risk of aggressive tax planning associated with the actual investment.In practice, Sampension said its rules meant that in future it would not make new investments in, for example, forestry funds and private equity funds domiciled in the Cayman Islands until the islands were taken off the EU list.At Danske Bank subsidiary Danica Pension, CIO Poul Kobberup said his firm looked carefully at countries on the EU’s tax blacklist.“Therefore, the addition of the Cayman Islands to the EU blacklist means that we will rethink our position on any possible future investments through the Cayman Islands,” he said, adding that the firm was focusing on making sure those investments were subject to proper and fair taxation.“The addition of the Cayman Islands to the EU blacklist means that we will rethink our position on any possible future investments through the Cayman Islands”Poul Kobberup, CIO at Danica PensionFor now, however, Danica Pension had no plans for new investments via the Cayman Islands, he said.In Norway, municipal pensions heavyweight KLP said it was now considering together with other market players how to address the issue of the blacklisting.“We have very limited exposure through the Cayman Islands, but so far we will not continue investing through this jurisdiction until we have decided how to deal with the blacklisting,” said Sissel Bjaanæs, KLP’s director of information.Norwegian pension provider DNB Liv said that in the wake of the EU announcement, it was currently working on an assessment of how this would affect current and future investments in Cayman-domiciled funds.“Our current DD [due diligence] process for all domiciles include AML [anti-money laundering] assessments and that the fund has all necessary information on all investors in the fund in this regard,” a spokesman said.DNB Liv’s ongoing internal assessment would determine if changes in this process were needed for new investments, he said, and how the firm should work with current managers to further influence their choice of domicile. The decision last week by European Union finance ministers to add the Cayman Islands along with three other countries or territories to the EU list of non-cooperative tax jurisdictions has prompted some Nordic asset owners to halt new investments made via the Caribbean tax haven.Others say they are considering what action to take, but none questioned by IPE this week said explicitly they would divest holdings through Cayman-domiciled vehicles.In Denmark, where pension funds have been keen to distance themselves from the practice of aggressive tax planning both by themselves and firms they work with, the DKK886bn (€117.6bn) pension fund ATP has said it is not investing in the Cayman Islands after the recent update of the EU blacklist.Lars Toft, tax director at ATP, said: “With Cayman Islands on the list we will not invest in the jurisdiction going forward.” Mikko Mursula, deputy CEO and CIO at IlmarinenIn Finland, pensions insurance company Varma said it is following the situation regarding the Cayman Islands and the EU’s tax haven list closely.“When it comes to our principles in general,  we require that the domiciles of funds participate in the exchange of tax information between authorities,” a spokeswoman told IPE.“Varma expects that the asset managers pay taxes in those jurisdictions in which they operate and in which the economic activity or work giving rise to the declared income is deemed to occur,” she said.Ilmarinen, Varma’s close rival, also said it was monitoring the situation.“Our goals in investments are long term goals,” said Mikko Mursula, deputy chief executive officer and chief investment officer.“Current changes of the EU list of non-cooperative tax jurisdictions do not have an immediate impact on our investment portfolio,” he said.“We monitor changes to the list. Furthermore, we consider our policies if the EU lays down consequences in the future,” he said.last_img read more

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