Month: September 2020

Irish listed and semi-state firms reduce deficits by €1.6bn

first_imgThe value of the average defined benefit (DB) fund in Ireland rose by 10% over the course of 2013, according to Mercer.The consultancy cited “tremendous” 20% returns from global equities as the driving factor behind the growth and noted that it would deliver “some relief” to a sector where previously eight out of 10 funds failed to meet the minimum funding standard.The claims were backed up by figures from Rubicon Investment Consulting, showing the average 2013 return across 10 Irish pension managed fund as 16.6%.According to the firm’s Pensions Risk Survey for 2013, deficits among companies listed on the Irish Stock Exchange and semi-state organisations, such as ESB, fell by €1.6bn over the 12 months to December. Sean O’Donovan, head of Mercer’s DB risk group, said trustees had benefitted from the strong returns but were also more prepared for the volatile market conditions seen in the past few years.“Pension schemes are better positioned than in 2000 or 2008 to protect their gains,” he said. “Many schemes have put in place investment strategies where they systematically de-risk as funding levels improve.”O’Donovan added that, among the consultancy’s clients, 2013 saw more than 30 funding triggers fulfilled, resuling in de-risking.The Mercer partner said many companies were now putting in place journey plans to reduce pension risk over time.However, the Pensions Board’s chief executive Brendan Kennedy has previously noted that many schemes did not appear happy with the amont of de-risking expected of them.He told the Irish Association of Pension Funds’ annual benefits conference last year that it was “very clear” from schemes’ funding proposals that they were commiting to “begrudgingly and at the minimum rate possible” to de-risking.last_img read more

Friday people roundup

first_imgSwedish government, RPMI Railpen, AIC, ICI, Invesco Powershares, Dexion Capital, AGC Capital, SCIO Capital, NewSmithSweden – Per Bolund has been appointed as minister for financial markets by incoming prime minister Stefan Löfven after the country’s recent general election. Bolund replaces former AP7 head Peter Norman, whose government was voted out in favour of a left-leaning coalition comprising the Social Democrats, the Green Party and the Left Party. Bolund, a Green MP, will now oversee the reform of the AP funds, which the previous government said would be cut in number from five to three.RPMI Railpen – Karl Sternberg has been appointed non-executive director for the pension fund for retired railway workers. RPMI and Railpen Investments are wholly owned subsidiaries of the Railways Pension Scheme, managing the assets and administration for the scheme as well as third-party clients. Sternberg was previously CIO at Deutsche Asset Management, and he also co-founded Oxford Investment Partners.Association of Investment Companies (AIC) – Peter Arthur is set to be the next chairman of the AIC board, replacing Andrew Bell, who will step down in January 2015 after nine years. Arthur joined the board of the industry representative body in 2011, and has been deputy chairman since 2013. Previous experience saw Arthur as director of ISIS Asset Management. Investment Company Institute (ICI) – William McNabb has been elected to a second term as chairman of the ICI. He has been elected to serve for an additional year. The board also elected Gregory Johnson as vice-chairman, also for one year. McNabb is currently chairman and chief executive of Vanguard and joined ICI’s board of governors in 2008. He also moved to head up Vanguard in the same year.Invesco Powershars – Nicolas Samaran has been appointed as head of product development for the EMEA. Samaran takes up a newly created role in Invesco’s exchange-traded funds (ETF) business. He will work with Lorraine Wang, global head of ETF products, and develop a new range of ETFs for the European market. He was previously head of investment content at Source, an ETF provider.Dexion Capital – Max Nardulli has joined the alternatives investment bank as head of international sales. Nardulli will be responsible for growing the firm’s investor base. He joins from Cheyne Capital, where he managed business development outside of the UK. He also worked for Goldman Sachs.AGC Capital – Jérôme Marie, François Bouillon and Matthieu Lallaï have joined the French private equity house in its fund-of-funds team. Marie joined as principal, with Bouillon and Lallaï as vice-president and analyst, respectively.SCIO Capital – Barry Lucassen and Eriko Aron have joined as directors in the portfolio management and risk management teams, respectively. The duo join the European structured credit manager from Aeris Capital and Detusche Bank.NewSmith – Charles Hopkinson-Woolley has been hired as head of alternatives and products for the London-based asset manager. He joins from Tyrus Capital, with previous experience at Deutsche Bank and Cazenove.last_img read more

IPE Views: Watch out, MiFID II is coming!

first_imgMiFID II is set to extend the scope of regulation to pretty much all asset classes and a wider set of financial services firms. MiFID I encouraged trading on exchanges against quoted prices, but small lot sizes encouraged the creation of dark pools as investors sought more effective execution for large trades. The fragmentation of trading has also led to high-frequency trading, using algorithms to arbitrage pricing across different platforms – an activity that author Michael Lewis claimed, in his book Flash Boys, was rigged in the US by traders who front-run orders placed by investors. Whether that is true or not is controversial, but MiFID II introduces restrictions on the use of algorithms, high-frequency trading and dark pools.Another area where MiFID II is likely to have a major impact is through tighter rules around payments and services that could be considered inducements or would influence the overall governance of the related activities.This could encompass a huge range of activities, including soft commissions and the bundling of ‘free’ research alongside brokerage services. Forcing fund managers to be open about paying for research, whose costs were in the past hidden in transaction fees charged to the funds they managed – rather than to the fund manager’s P&L – will inevitably mean that much research will simply no longer be paid for. The mega firms could conclude that they have enough in-house resources to not require additional payments for all the research they were getting for free in the past, whilst the boutique firms may just be unable to afford it.While the changes will affect each type of firm differently – and, indeed, probably each firm differently – there is little doubt that pretty much every firm will require changes, often substantial, making them evaluate and change trading practices, operating models and partnerships, and even reconsider the financial viability of some products and activities.For European institutional investors, such changes mean there could be a substantial indirect impact on their own interests. As Ian Sutherland, chief executive at Kellian Consulting, tells me, there are three questions that pension funds should be asking of their fund managers over the next year.First, what do the fund managers see as the likely impact of MIFID II on their services? Second, what are they planning to do in response to the implementation of MIFID II? And third, what do they expect of their institutional clients?Institutional investors have plenty of time still to ensure these questions are being asked at their next meeting with their fund managers. But, with implementation due at the start of 2017, the clock is already running, and time getting short. While not all the answers are available yet, understanding the known unknowns will be critical.Joseph Mariathasan is a contributing editor at IPE Uunderstanding the known unknowns of MiFID II will be critical, Joseph Mariathasan warnsRegulation is always a double-edged sword, and that is certainly true of the EU’s attempts to create a single market for investment services and activities. Dark pools, high-frequency trading by firms using mathematical algorithms and a plethora of new competing exchanges are all relatively recent phenomena, having grown dramatically since the implementation of MiFID I (Markets in Financial Instruments Directive I), which came into force in November 2007.MiFID I applied mainly to equities, and whilst it had many positive results, it also had some undesirable and unforeseen consequences. MiFID II is coming into force on 3 January 2017. European institutional investors do need to take an interest, even if they are not directly affected.MiFID II addresses three key areas. Firstly, it represents the last leg of the European Commission’s post-financial crisis commitment to the G20 to reduce the risk in, and bring transparency to, the world of OTC derivatives. This follows the European Market Infrastructure Regulation (EMIR), designed to increase the stability of the OTC derivative markets in the EU, and the Alternative Investment Fund Managers Directive (AIFMD) regulating hedge funds and private equity firms. Secondly, MiFID II addresses the unforeseen consequences of MiFID I, and thirdly, it provides added investor protection.last_img read more

APG names SNS Reaal head van Olphen as new chief executive

first_imgAt the request of the Dutch government he took up the role of chief executive of the then-newly nationalised bancassurer SNS Reaal, where he completed the restructuring of the company.His latest job, until September last year, was CEO of VIVAT Insurance.Bart le Blanc, chairman of APG’s supervisory board, said: “With Gerard van Olphen, APG will get an exceptionally knowledgeable and experienced executive officer.“Together with his colleagues, he will have to steer APG through the coming years, when potentially far-reachting changes in de Dutch pensions system will occur.”Le Blanc continued: “These changes might trigger new requirements in the nature and quality of APG’s services.“With his extensive experience in the financial world, Gerard will be of great value to APG, our customers and their participants.”APG said the new chief executive will receive a fixed gross annaul salary of €500,000 as well as €66,000 of pension contributions, but no variable remuneration or bonus.This represents a 10% decrease in salary level compared with Van Olphen’s predecessor. The supervisory board of the €410bn Dutch asset manager and pensions provider APG has appointed Gerard van Olphen as its new chief executive officer, starting in mid-March.Van Olphen is to succeed Dick Sluimers, who left at the end of last year. In his new role, he will be responsible for all business activities of APG, which is the provider for several pension funds – including the €351bn civil service scheme ABP – with 4.5m participants and pensioners.APG’s new chief executive has held various executive and management positions in the financial sector, including chief finance and risk officer as well as vice chairman of the executive board at Achmea.last_img read more

KLP returns 2.7% in first half despite 1.9% loss on equities

first_imgNorway’s KLP reported a 2.7% return on its investments in the six months to the end of June, despite having made a 1.9% loss on its equity holdings in the period.Sverre Thornes, the pension provider’s chief executive, said: “KLP is delivering a good return despite unsettled equity markets and low interest rates.”He said KLP had prepared itself for these challenging markets by building up solvency during good years, and that in the first half this strategy had proved itself to be right.The 2.7% first half return is up on the 2.3% return produced in the first half of 2015. Equities suffered a loss of 1.6% in KLP’s collective portfolio between January and June, down from a 4.7% profit in the same period last year, while bonds made a profit of 4.9%, up from zero return in the comparable year-earlier period.Property, which makes up 12.3% of KLP’s NOK444bn (€47.9bn) collective portfolio, returned 5.1%, only slightly below the 5.2% return the asset class produced in the first half 2015.Premium income, excluding premium reserves that were transferred into the scheme, rose to NOK17.9bn in the second half from NOK15.9bn in the same period last year.The local authority pension provider saw assets increase to NOK577bn by the end of June, from NOK543.2bn at the end of December, and from NOK526bn at the end of June last year.KLP said it had experienced considerable growth in the number of new public sector occupational pension customers in recent years.“The market situation for public sector occupational pension is now expected to be more stable,” KLP said.The heavy influx of new customers in the last few years happened largely as a result of decisions by Storebrand and DnB Livsforsikring to exit the public sector occupational pensions market.KLP said in its interim report that the ongoing municipal reform in Norway may affect its customer base, and added that the company was following this situation closely.Solvency coverage increased to 189% at the end of June, up from 187% at the end of December, before using the transition rules for the period in which the new Solvency II regime beds in, KLP said.Under the transition rules, its solvency coverage increased to 343% from 274%, it said.last_img read more

Wednesday people roundup

first_imgEDHEC-Risk Institute, NEST, European Patent Office, BlackRock, Eastspring Investments, PIMCO, Aviva Investors, AMP Capital, Psigma, HSBC Global Asset Management, PwC, RBS, Capital Employee BenefitsEDHEC-Risk Institute – Mark Fawcett, CIO of the trustee body running the £1bn (€1.1bn) UK mastertrust NEST, has been appointed chairman of the institute’s international advisory board. He replaces Tomas Franzén, who is chief investment strategist at Sweden’s AP2 but retiring at the end of the year to pursue non-executive roles. The role of the EDHEC-Risk Institute international advisory board is to consult on the relevance and goals of the research programme proposals presented by the centre’s management and to evaluate research outcomes with respect to their potential impact on industry practices. It counts 35 members. Franzén has been at AP2 since its inception in 2001. He was appointed chief investment strategist in 2006 and has worked alongside the chief investment officer, Hans Fahlin, since 2010.European Patent Office – Silvio Vecchi is reported to be due to step down from his role as principal director of the European Patent Office’s pension fund at the end of the year, to be replaced by Thomas Groffmann, former COO for Germany, Austria and Eastern Europe at BlackRock. Vecchi has been leading the pension fund for nearly 20 years.Eastpring Investments – The Asian investment management arm of Prudential has appointed Virginie Maisonneuve as CIO. Maisonneuve will start in her new role on 11 January 2017. She has almost 30 years of global asset management experience, having most recently been CIO of equities at PIMCO. Before that, she was head of global equities, director and portfolio manager for more than 10 years at Schroders. She has also previously worked at Clay Finlay, State Street Research, Batterymarch and Martin Currie.  Aviva Investors – Gary Sherwin has been appointed head of UK investment transactions, a new role. He spent 16 years at Land Securities. Daniel Lienhard has joined in Germany as head of investment transactions, based in Frankfurt. He was previously at Savills Investment Management. Gaston Brandes has been appointed managing director and head of real estate business development. He joins from Grosvenor Fund Management. Helen Rainsford has been appointed senior director of retail development and joins from Martins Properties. Darren Freed has been appointed as retail asset manager and joins from Hammerson. AMP Capital – The investment manager has re-structured its global equities and fixed income business. In the latter, the changes are designed to “provide greater proximity between research and portfolio construction and management in global fixed income”. They involve the creation of two new roles – a senior portfolio manager within the macro team and a portfolio analyst within the credit team – and the scrapping of the role of head of credit and core, having been held by David Carruthers. The changes to the equities business are said to reflect increased investor interest in listed real assets. AMP is bringing together its two listed real estate capabilities – listed infrastructure and listed real estate – under the leadership of Matthew Hoult in the new role of head of global listed real assets. As a result of the new structure, Tim Humphreys, head of global listed infrastructure, will leave the role. Psigma Investment Management – Sanjeev Chopra is joining as investment director in January, having most recently been client director at HSBC Global Asset Management. Chopra will report to John Howard-Smoth, Psigma chief executive. Chopra worked at HSBC for nearly 20 years.PwC – Sinead Leahy, former head of UK pensions solutions at Royal Bank of Scotland, has joined as a partner in PwC’s pension consulting business. She will lead the firm’s focus on strategy and implementation advice to trustees of large defined benefit schemes as part of PwC’s pension investment consulting services.Capita Employee Benefits – The UK employee benefits business has made four senior appointments in its investment consultancy practice. Chris Gill and Hiten Nandha have joined as senior investment consultants, coming from Mercer and Willis Towers Watson, respectively. Tom Hawthorn, who joined as a senior investment consultant from LCP towards the end of 2015, has been promoted to head of manager research. Brendan Coffey joins as head of investment strategy, having previously worked at Unilever as Univest director of operations.last_img read more

FSB proposals ‘positive’ for asset managers, investors, says Moody’s

first_imgMuch of the recommendations from the FSB were “an extension of large asset managers’ existing risk management capabilities”, Cremonese and Robert said.Any increase in cost would be “mild”, they added, with some being passed on to investors.The pair added that the FSB changes would increase the security and credit quality of the largest asset managers: “Over time, the benefits of implementing these type of policy changes should increase earnings stability and lower reputational risk, a key element in assessing the creditworthiness of asset managers.”The post-crisis rise in appetite for alternative investments such as private debt and infrastructure, areas traditionally dominated by investment banks, led the FSB to recommend restrictions on illiquid assets held within open-ended funds.Investors in these funds are typically able to trade on a daily basis, but this can lead to problems at times of market stress.Last year, several open-ended UK property funds were forced to suspend redemptions because investor withdrawals exhausted their cash reserves.The FSB recommended the introduction of redemption fees and other measures “to reduce the incentive to sell during periods of market stresses”.Such a move would be “positive” for long-term investors, Moody’s said. Long-term investors and large asset managers will benefit from rule changes proposed by the Financial Stability Board (FSB), despite their cost, according to Moody’s.The credit rating agency said the recommendations, made last week following a lengthy consultation period, would enhance risk management, transparency and resilience for asset managers and their clients.The FSB proposed that national regulators should monitor more closely the liquidity and leverage of open-ended funds and called for new, standardised methods of reporting both aspects.Marina Cremonese, senior analyst at Moody’s, and Vanessa Robert, senior credit officer, said in a research note: “Although the recommendations will increase costs, large asset managers … are better positioned to absorb them. However, ultimately, all players should benefit from a safer investment fund industry that continues to generate strong margins with less volatility.”last_img read more

Scrap mandatory retirement, say Irish politicians

first_img“The Joint Committee considers that mandatory retirement age should be abolished. No employee should be contractually obliged to retire based on age if they are willing and able to remain at work.”The committee called for Regina Doherty, minister for employment and social protection, to review retirement age laws and also address gender inequality related to the state pension “as a matter of urgency”.Changes made to Ireland’s state pension in 2012 included a doubling of the number of contributions required to qualify for the state pension, which the committee said had a disproportionately negative effect on women.According to the Organisation for Economic Co-operation and Development, a 65-year-old Irish person had a life expectancy of 12.5 years in 1985. By 2014, this had risen to 18.4 years.The committee’s recommendation followed research from The Citizens’ Assembly, a group representing the Irish public, which said 86% of its members supported scrapping mandatory retirement.The Citizens’ Assembly also called for the government to address an anomaly brought about by the divergence of mandatory retirement ages and the state pension age. This had resulted in some people being forced to retire from their workplace at age 65, but not be eligible to claim the state pension until age 66. Companies should no longer be allowed to force employees to retire, according to a committee of Irish politicians.The Irish parliament’s Joint Committee on Social Protection last week published a report calling for a number of changes to the state pension and retirement policy.Many private sector companies in Ireland have a mandatory retirement age, typically 65, despite the government moving to raise the state pension age to 68 by 2028.John Curran, chair of the committee, said: “Committee members were united in the assertion that more work must be done to ensure a sustainable and fair state pension.last_img read more

Joseph Mariathasan: Greece – is there hope?

first_img“Italy also has a political elite that is used to milking the system, but it has a chance to succeed because it has industry,” says Tsimikalis. “Greece always had corruption but it does not have industry.”What Greece does have, as microelectronics engineer Apostolos Samelis explains, is arguably an overweight public sector with employment secured by the constitution. When the socialist government in 2010 conducted a census, it found that it was employing almost a fifth of the country’s 4.2m workforce. That is a legacy of labour unions protesting a century ago at unjust dismissals whenever a government changed, at a place in Athens now called Plateia Klafthmonos – the Square of Tears. The protests and tears resulted in jobs for life for civil servants and a focus thereafter by ambitious parents on securing public sector jobs for their children to provide security.Salaries and pensions in the Greek public sector do look unjustifiably high compared to the private sector and disproportionally high in relation to other EU countries, even after the hefty austerity cuts. It could be argued that the public sector overcommits public resources for its own benefit.However, as Samelis points out, in the present stagnant economy it cannot be overlooked that state salaries and pensions support many households, especially those hit by unemployment. Inevitably, in an economy that does not generate new wealth, further reductions of public expenditure will hit the weakest the most. This has been one of the sticky issues prohibiting swift conclusion of negotiations between international lenders and all recent Greek governments.It is easy to dismiss Greece as only a place for tourists – numbers have certainly increased significantly along with hotel prices in the wake of the crises in neighbouring countries. Yet, for Giuseppe di Mino, managing director at Amber Capital, Greece is probably the safest place to invest in Europe because it has come full circle. It has gone from a socialist to a conservative-liberal government, then to populism. If there is an election next year, it is very likely that the centre-right party will come back to power.As di Mino argues, Greece has tried all the different political colours and flavours and is now back to square one. The most important thing, however, is that during this time Greece was forced to pass a lot of structural reforms. It is the country that has reformed the most in Europe because it was forced to. The economy suffered a 25%-plus decline in economic output since 2010.“We think once we have political stabilisation and the completion of the third bail out problem next year the economy could rebound very quickly,” di Mino says.The investment opportunities that Amber finds in Greece are predominantly in equity rather than credit, says di Mino. The simple reason is that most of the debt in what used to be highly leveraged sectors such as banking has been restructured and converted into equity. In Greece, there are very few private corporate bonds in the market. Some have been repaid and some equitised. In addition, during the last few years, very few corporates have issued new debt because the yields are too expensive.A key element of any restructuring within the Greek economy is the banking sector. There has been a natural consolidation in the sector, with the original 10-15 banks now reduced to only four, with others merged or dissolved.“You see an oligopoly now in a country with a 25% decline in GDP and where credit creation has been decimated over the past seven years” says di Mino.The main challenge, he argues, is how well banks can manage their non-performing loan portfolios, which account for more than 50% of assets. “They are effectively running a bad bank,” he says.What are Greece’s competitive industries besides tourism? Samelis and Tsimikalis argue that Greece has a readily deployable and highly-skilled labour force in science, medicine and engineering that makes it easy for multinationals like Apple and Google to potentially open up design centres in Greece.One example Tsimikalis gives is Customedialabs. The company has its head office in Philadelphia but all the development is undertaken in Larisa, Greece, where they employ a large number of developers, marketers and programmers who produce sophisticated digital content for their US clients.Greece’s geographic location also gives it some unique advantages. The port of Piraeus looks set to play a key role in China’s “one belt one road” strategy. Chinese shipping company COSCO acquired the Piraeus Port Authority in August 2016 which should accelerate its role as a leading harbour in the Mediterranean.Greece is an area that could be very attractive once there is stabilisation in the political environment. For investors, and for the Greek population, that is a welcome thought. Greece has successfully returned to the international bond markets and Standard & Poor’s has upgraded its ratings outlook on the country from stable to positive.But what is there beyond government debt? Amid the ongoing anguish of Greece, there do lie attractive investment opportunities. Finding them within an economy scarred by a history of dysfunctional politics is the challenge.A view expressed by many Greeks, including entrepreneur Markos Tsimikalis, is that the euro is the best thing that has happened to Greece. As he argues, it enabled an independent regulatory framework and it cut off the central bank from the claws of the Greek political system.Many Greeks would agree with him. They recognise that Greece has structural problems that its post-war governments have never been able to solve, such as corruption and tax evasion, that make it closer to an emerging market than a developed.last_img read more

Lobby group plans campaign to cut barriers to cross-border funds

first_imgFrancesco Briganti, former director of the European Association of Paritarian Institutions (AEIP), has set up an advocacy group to lobby for the growth of cross-border social protection solutions.The Brussels-based organisation, named Cross Border Benefit Alliance (CBBA) Europe, will push for the removal of existing obstacles to the development of cross-border employee benefits in the EU.“The Alliance is strongly convinced that the current national barriers to the creation of cross-border employee benefits represent a useless burden and foolish costs for sponsor companies and future beneficiaries,” CBBA-Europe’s said on its newly-launched website.“Economies of scale, simplicity in administration, full portable social benefits, costless mobility of workers and consistent taxation formulas would be beneficial for both the EU internal market and the European Social Model. “In addition, huge capital potentially accumulated by these pan-European funds may be invested in the European economy, and contribute to the completion of the Capital Markets Union (CMU) and to the achievement of the main goals of the so-called Juncker Plan.”While cross-border schemes already exist, they have not gained much support across Europe. Notable exceptions are Resaver, which began accepting money in March, and Aon’s UnitedPensions IORP. The consultancy group added its own pension funds and those of Swiss fragrance company Givaudan to UnitedPensions this year.Briganti said the development of cross-border employee benefits had encountered resistance from parts of the European pension industry.“However, after studying for more than five years the legal feasibility of pan-European social protection plans during my PhD in EU law, the conclusion was that the EU Treaties would not need to be changed to make it happen,” he said. “In other words, the main obstacles are mainly political [in] nature rather than legal.“Yet, despite great interest in cross-border employee benefits, it seems that only the voice of those who oppose them has been heard so far in Brussels. Some advocacy organisations even argue that there isn’t real appetite or a need for cross-border benefits in Europe, and defend the current fragmentation and status quo.”CBBA-Europe will host an inaugural conference in Brussels on 6 December this year. Keynote speeches will be delivered by Gabriel Bernardino, chairman of the European Insurance and Occupational Pensions Authority, and Phyllis Borzi, former assistant secretary for employee benefits security of the US Department of Labor under the Obama administration.Representatives of multinational employers, European sector-wide federations of employers and workers as well as pension providers will also participate to discuss the issues at stake.More information on CBBA-Europe can be found at www.cbba-europe.eu.last_img read more