“Former shareholders’ pre-emption rights have been excluded for the capital increases planned after a capital reduction to zero,” IVG said, while “no provision has been agreed in the insolvency plan for subordinated creditors”. Should the court approve the plan, the implementation of the capital measures is planned for mid-2014.IVG would then expect to be able to lift insolvency proceedings by year-end.Wolfgang Schäfers, the board member at IVG in charge of drafting the insolvency plan, resigned two weeks ago.In a letter to the supervisory board, he explained that laying the foundations for the recovery of the company had been what he wanted to achieve before leaving.Meanwhile, IVG has sold its retail fund business to Deutsche Fonds Holding.The Private Funds Management arm, with around €2.7bn in assets under management, was sold for an undisclosed sum and is still subject to approval by the cartel authorities.With the takeover, Deutsche Fonds Holding has increased its fund assets under management to €5.6bn, the company said. Creditors and shareholders in IVG Immobilien have approved an insolvency plan for the beleaguered German real estate company.Creditors approved the plan with a total of 99.47% of votes, while shareholders approved it with 56.93% of votes.The plan includes a debt/equity swap taking IVG off the stock market.In total, the company has €3.2bn in debt to restructure, and, according to the draft, an insolvency ratio of at least 60% must be paid to non-subordinated, unsecured creditors.
Baring Asset Management has said it intends to convey a sense of “consistency” after the departure of key multi-asset figure Percival Stanion.Stanion, alongside colleagues Andrew Cole and Shaniel Ramjee, are to leave after a combined 48 years of service with Barings to head up a new multi-asset offering at Swiss rival Pictet Asset Management.Stanion, who joined Barings in 2001 and led the company’s multi-asset offering, was known as a pioneer in the space, before announcing his defection to Pictet in early August.In response, Barings’ then CIO Marino Valensise moved over to become head of multi-asset to lead the flagship offering as clients reacted to Stanion’s departure. According to FE Analytics, a fund research portal, Barings’ multi-asset fund suffered net outflows of £364m (€465m) in August despite seeing average monthly net inflows of more than £50m in the previous six months.Valensise told IPE the company was now in the process of managing the transition from the old management team to the new.He said his new role would see take him full ownership of the multi-asset business and chair the strategic policy group, which dictates asset allocation.“We had a mixed reaction from the consultant base,” Valensise said, “with some deciding to stay and others deciding to leave because the change was a material one.“We are now meeting with a large number of clients directly to deliver our message, which is one of consistency.”He said the process would be ongoing for the next few months, but he said, with his experience as CIO and working in the strategic policy group and multi-asset team, he was confident.Barings has hired Ken Lambden, previously of UK-based rival Schroders, to take the helm as CIO after Valensise’s shift to head of multi-asset.However, Valensise said his transition away from CIO began before the announcement of Stanion’s departure.“After the opportunity [to be head of multi-asset] materialised, I was very interested,” he said. “I wanted to do something more linked to money management.“So, to some extent, this was an opportunity for me. I was already part of the asset allocation decision entity and hired most of the team members. So I call this an opportunity.”He said once client management had finalised, the multi-asset team would once again focus on maintaining its position within the market, while introducing new products and diversifying globally.“In the UK, we will just have to continue delivering investment performance,” Valensise said.“Going forward, we will be treating outgoing clients and remaining unit holdings fairly. We are keen to do a good job there.“However, the composition of the business tomorrow will be different to yesterday. In five years’ time, the multi-asset business will probably be more diversified and international.”The trio’s move to Pictet came after the heating up of the multi-asset and diversified growth fund (DGF) rivalry in the UK.Recent moves saw Standard Life Investments (SLI) lose several key personnel to rival managers, with staff moving to Invesco Perpetual to help launch a multi-asset offering.Key SLI-figure Euan Munro also left the Scottish manager to take up the chief executive role at Aviva Investors, which in turn also launched a DGF.
The VFPK said this would be “unsuitable” for occupational pension systems.Rather than boosting Pensionskassen and Pensionsfonds, the current proposal would create “ideal conditions for profit-orientated financial service providers”, the association warned.The pension fund association also stressed that existing Pensionskassen were organised by the social partners, as would be the newly proposed vehicles, and that existing vehicles were working as non-profit organisations without expensive sales and distribution activities.Instead of creating new pension vehicles, the VFPK said the government should remove legal hurdles to voluntary employee contributions.One problem currently is that some pensions received via a Pensionskasse from supplementary voluntary contributions are subject to social security taxes while those from life insurers are not. The VFPK, the association of company pension funds in Germany, has rejected the Labour Ministry’s (BMAS) proposal to introduce new industry-wide pension plans.Last month, the BMAS recommended the introduction of industry-wide, Dutch-style pension plans in Germany to increase participation in the second pillar, by allowing, among other things, employers to defer any sponsor support and other responsibilities to a yet-to-be-established protection fund.The VFPK rejected the proposal, pointing out that employers could already set up pension plans without the obligation to make additional payments in difficult times.Further, it expressed concerns that a new insolvency vehicle, which the Ministry proposed to hedge employer risks, would be subject to Solvency II regulations.
Long/short asset management had detracted from investment profits during the year to the tune of SEK5.5m (€576,000), while tactical allocation had knocked SEK23.6m off returns, AP7 reported, saying the latter was due to less exposure to global equities than the benchmark.However, the profit on private equity had offset the active management losses.AP7 figures showed Såfa outperformed the private PPM funds on offer, which returned an average 8.8% in 2016.AP7’s equities portfolio – the largest of its two building blocks for its pension products – returned 16.5% last year, which it said was in line with the benchmark.The return on the bond portfolio fell to 0.6% last year from 0.8% in 2015, and was 10 basis points below the benchmark.Total assets in the two funds grew to SEK343bn from SEK283bn.Richard Grottheim, the fund’s chief executive, said: “How the return will be in the next few years, no one knows. However, we know that the long run it can not be at the levels we have seen in recent years.”Sooner or later, the stock market would go down, he warned.“It will also affect AP7’s savers, and leverage will amplify the downturn, just as it strengthens the gains,” Grottheim added.He said AP7 continued developing its strategic equity portfolio last year, and would introduce the changes gradually over the next few years.One of the main aims was to boost diversification within AP7’s constraints, reducing risks for savers at age 65 and raising the minimum level of pensions in the system, he said.“We have also decided in the coming year to design a green mandate that invests in listed companies with activities that contribute to solutions to climate problems,” he said. Swedish national pension fund AP7 says active management dented its 2016 profits, despite posting a 15.5% return last year.AP7, which provides the default option in the country’s Premium Pension System (PPM), more than doubled its return relative to 2015’s figure in its key balanced pension product Såfa.In its annual report, AP7 said: “The fund’s positive development is explained by the rise on the global equity markets in 2016, which was intensified by leverage and also by the weakening of the Swedish krona.”However active management had proven a drag on performance, according to the report.
Pension trustees feel “out of their depth” on data protection and cybersecurity issues, according to a recent survey.UK audit firm Crowe Clark Whitehill surveyed 145 pension professionals on risk management issues and found a split in opinion as to the importance of cybersecurity.Data protection and cybersecurity issues ranked in the top five risk concerns, behind funding volatility, employer covenant strength, and investment issues.However, Crowe Clark Whitehill identified a “significant difference in views between small and large schemes”. Small schemes – defined as having less than £100m (€110.5m) in assets – were more likely to outsource activities to third parties, the audit firm said, and so would expect these parties to be responsible for data security.Respondents responsible for defined contribution funds were more concerned about the issue than their counterparts running defined benefit schemes, the survey showed.Eddie Hodgart, risk and assurance director at Crowe Clark Whitehill, said: “There is an awareness within schemes that the personal data that they hold is a valuable commodity and that they need to act to ensure that their members’ information is protected.“However, while most trustees are comfortable managing financial and regulatory risks, many feel out of their depth with non-traditional risks such as cybersecurity. More work is needed to educate pension trustees on managing non-traditional risks which impact pension schemes.”The findings follow a major cyberattack that hit UK institutions including the National Health Service earlier this year. The incident raised concerns about firms’ awareness of data security.Today, the UK’s Department for Digital, Culture, Media and Sport (DCMS) announced that it would be adopting the EU’s General Data Protection Regulation (GDPR) into its law book. GDPR is set to come into force in May next year. The rules specify 11 mandatory clauses to be included in contracts with third parties governing the protection of data, as well as a range of other measures.Leanne Oddy, associate at law firm Addleshaw Goddard, said it was “very unlikely that existing contracts will contain all of the mandatory clauses and trustees/managers will therefore need to conduct a contract review and seek amendments”.“Trustees/managers need to review processes to ensure that data breaches can be detected, isolated, reported and remedied appropriately and would be well advised to document these processes,” Oddy added.A “robust” cybersecurity policy was likely to become a key document for pension schemes, she said.“May 2018 may seem like a long time away,” Oddy said. “However, a significant number of actions need to be taken and agreement reached with various third parties and trustee/managers should therefore prioritise GDPR now.” A statement from DCMS said its planned new data protection bill would make companies handling data “more accountable… with the priority on personal privacy rights”.“Those organisations carrying out high-risk data processing will be obliged to carry out impact assessments to understand the risks involved,” the DCMS said.
In June, newly appointed finance minister Ionuţ Mişa announced that the mandatory system would be abolished, then retracted his statement a few hours later by claiming there was some “confusion”.In mid-August the prime minister stated that the system, which the government claimed produced a lower return than that from the first pillar, was up for review, with options including cutting the 5.1% contribution rate to 2.5%, or even 1%.Another proposal, abolishing the 2.5% management fee charged by pension management companies would push them into the red, according to the Romanian Pension Funds Association (APAPR).According to the 2008 law that established the second pillar, the contribution rate was due to have risen to 6% by 2016.However, last year the rate was increased from 5% by a meagre 0.1 percentage point, and has remained unchanged in 2017.Both the European Commission and International Monetary Fund have criticised successive governments’ backsliding on the contribution rate, partly because of Romania’s poor demographic outlook.As a result of the shrinking labour force the dependency ratio is projected to rise from 1:1.3 in 2014 to 1:2.5 by 2032.As of the end of July, according to the FSA, the second pillar had 6.93m members and assets under management of RON37.2bn (€8.1bn), of which around 93% is invested domestically.According to the APAPR the pension funds hold around 14% of Romanian government bonds, making them the second biggest investor after banks.In the case of Bucharest Stock Exchange equity, second-pillar funds rank as the single biggest investor, accounting for 10-15% of turnover.In response to the latest announcement, the APAPR stated that the second pillar remained the best means of ensuring the highest pensions for the workforce, especially those on lower wages, and called for the prime minister to consult with the relevant actors. Romania’s mandatory second-pillar system is to become voluntary as of 2018, according to the country’s prime minister.In an interview on 7 September with television station Digi24, Mihai Tudose did not specify whether second-pillar members would have to opt in or out of the second pillar, but he said the government would advise members on what it considered the best route for them depending on their salary.He also emphasised that there was no question of the system being “nationalised”, a contentious term in Romanian financial politics. In April pensions regulator the Financial Supervision Authority (FSA) fined NN Pensii, the biggest of the second-pillar providers, while sanctioning and fining its then CEO, for informing its clients that the system was set to be nationalised.Tudose’s announcement follows months of speculation over the fate of the second pillar following the centre-left Social Democratic Party’s victory in the December 2016 elections.
The UK’s Local Pensions Partnership (LPP) has joined major pension funds from North America and Australia in committing assets to private equity investor Hermes GPE’s co-investment platform.The Hermes GPE PEC III Co-Investment Fund LP (PEC III) raised total commitments of $389m (€330m) from a group of investors that includes, besides LPP, the State Teachers’ Retirement System of Ohio, Canada Pension Plan Investment Board, and Australian superannuation fund Hostplus.Private equity firm Ardian and a number of other UK and continental European investors are also involved.Including “sidecar” and segregated co-investment mandates, Hermes GPE has raised around $620m in total for the co-investment platform. The latter mandates come from longstanding Hermes GPE clients and will either invest alongside PEC III, or in separate co-investment and alternative strategies. PEC III has already committed $200m to 30 investments. The fund follows a thematic investment strategy, seeking to identify companies in niche markets or geographies where growth potential does not hinge on the wider macroeconomic cycle.Investors in the fund will contribute deal flow from their own private equity relationships alongside opportunities sourced from Hermes GPE’s network of general partner relationships.Hermes GPE is part of Hermes Investment Management – the asset manager wholly owned by the BT Pension Scheme – and currently manages around $5bn of private equity assets. LPP is a £12.8bn (€14.3bn) collaboration between the London Pensions Fund Authority and Lancashire County Pension Fund. The Royal County of Berkshire Pension Fund provisionally agreed to join LPP but has yet to invest significantly in the pooled funds the partnership has launched so far.
Annette MosmanPrior to this, she provided advisory services to companies in the financial sector on efficiency, and was an auditor at KPMG of major Dutch companies in various industries since 1992.She is also currently a board member and the treasurer of the Dutch Olympic Committee, NOC-NSF, and is a member of the supervisory board of the Dutch Cancer Society as well as a hospital.As of 1 January, APG’s executive board will comprise Gerard van Olphen (chairman), Annette Mosman (CFRO), Wim Henk Steenpoorte (chairman of pension fund services) and Ronald Wuijster. The latter is acting chair of asset management, following the departure of Eduard van Gelderen in August.The company is not only seeking a new CEO for its asset management branch, but also a board member for its new corporate arm, known as “participants and employers”, according to Dutch financial newspaper Het Financieele Dagblad.Once these positions have been filled in APG’s board would have changed dramatically, with only Van Olphen serving more than one year.Steenpoorte was appointed in September, and also joined from the insurance sector, as did Van Olphen. Angelien KemnaAway from APG, Kemna is to continue as an independent director and member of the audit committee of AXA Group, a board member of the Duisenberg School of Finance, and a non-executive director of Railpen Investment Board.APG is the asset manager and pensions provider for the €396bn civil service scheme ABP. The €456bn asset manager and pensions provider APG has appointed Annette Mosman as its new chief finance and risk officer (CFRO).She succeeds Angelien Kemna, who joined APG as chief investment officer in 2009 and subsequently assumed the role of CFRO of APG Group in 2014. Kemna’s second term of appointment expired on 1 November.Mosman joins from insurance company Generali Netherlands, where she is CEO. She has been a member of the insurer’s executive board since 2011, initially as CFRO before becoming CEO in 2015.Mosman was an associate partner at KPMG Advisory between 2006 and 2009, responsible for CFO advisory services to major banks and insurance companies.
The backdrop to the initiative and the recent study is the rapid growth of the green bond market. More than $100bn (€85bn) of labelled green bonds has been sold on the primary market this year, according to analysis from the Climate Bonds Initiative (CBI). This is a new record.“Something ‘good’ is going on in the bond markets”Simon Bond, Columbia Threadneedle InvestmentsChina is the top nation for green bond issuance this year to date, with China Development Bank, Bank of Beijing and ICBC the top issuers.In the UK, NOW:Pensions has introduced green bonds to its diversified growth fund, saying this was part of its commitment to socially responsible investment.The ATP-owned multi-employer pension provider holds green bonds denominated in sterling, US dollars, and Euros, with around 13% of total assets under management invested in the segment.Win Robbins, trustee director at NOW:Pensions said: “The iinvestment team has thoroughly researched the green bond market to identify bond issues which satisfy the risk return characteristics that the portfolio is seeking.“Encouraging and financing projects which focus on environmental and climate protection cannot be left solely to governments. The green bond market fulfils a vital role for society as a whole, while also benefitting members of the NOW:Pensions Scheme.”Ørsted, the former DONG Energy, yesterday announced it planned to sell its first green bonds, a hybrid capital security and a senior bond, both issued in Euros.Simon Bond, director of responsible investment portfolio management at Columbia Threadneedle Investments, said there has been a distinct social aspect to the latest surge in bond issuance.“Something ‘good’ is going on in the bond markets,” he said yesterday. “While issuance is up 10% over this time last year, these last few days have been seminal in the development of the market for social and sustainable bonds – 17 bonds have been issued in Europe this week which I would regard as ‘socially beneficial’.” Chinese and European organisations have completed the first phase of joint research to come up with a common language for environmental investing.The European Investment Bank (EIB) and the China Green Finance Committee (CGFC) have presented the initial conclusions of a project that ultimately seeks to facilitate the establishment of a common language in green finance, or “a standard-neutral taxonomy for the environmental use of proceeds”.The organisations’ study looked in detail at the green bond standards in China and the EU, finding that they used different categories to classify underlying assets. They recommended further work be carried out on the compatibility between Chinese standards and those agreed by a partnership of multilateral development banks and the International Development Finance Club.The CGFC/EIB initiative aims to provide a framework for initiatives that could create momentum for harmonising green finance standards. The organisations have said this could include proposals for a translation tool or “Rosetta Stone” using a universal system for classifying environmental activities for the purpose of comparing standards.
In the adjusted portfolio all countries have an equal weighting in principle, according a spokeswoman for the pension fund. Previously, the fixed income holdings largely comprised German and French government paper. Source: Source: ECBThe ECB has indicated that it may raise interest rates next yearAt the start of 2017, the scheme’s actual holding of euro-denominated government bonds was 32%, with worldwide government paper totalling 4%.At year-end, the combined government bonds allocation had been reduced to 29.5%.The Philips scheme attributed its overall return of 5.8% largely to the 9.9% gain on its equity holdings as well as the result of its currency hedge.Thanks to the depreciation of the main currencies relative to the euro, the currency hedge contributed no less than 3.8 percentage points to the scheme’s total profits.In contrast, the pension fund incurred a 0.7% loss on its 56% interest rate hedge.It reported losses across almost its entire 57.5% matching portfolio, citing higher interest rates as well as the appreciation of the euro as main causes.With a positive return of 1.7%, Dutch residential mortgages were the only exception.During the first six months, the Philips scheme lost 2.2% on its holdings of euro-denominated government bonds.Worldwide bonds and credit generated losses of 1.8% and 3.3%, respectively, while high yield credit (-3.9%) and emerging market debt (-0.6%) also produced negative results.Property holdings delivered 5.8%, according to the scheme. As the construction of a portfolio of direct non-listed property takes some time, Philips said it had temporarily invested in a combination of listed real estate and cash in order to get close to the desired property profile.Last year, it kept 7.2% of its assets in cash, invested in money market funds and loans with a very short duration. As the valuation of short-term interest rates is usually negative as a consequence of quantitative easing in the euro-zone, it made a 0.5% loss on cash, it said.Last April, the Philips Pensioenfonds granted its participants a 0.22% indexation based on a funding of 117.2% at year-end. As of April 2018, its coverage ratio stood at 119.4%.The pension fund reported asset management and transaction costs of 0.22% and 0.15%, respectively. It spent €100 per participant on administration costs. The €19.5bn Dutch pension fund of electronics giant Philips reduced its stake in government bonds from 40% to 30% in order to benefit from rising interest rates.In its annual report for 2017, it indicated that the strategic divestment came at the expense of euro-denominated government bonds.It reinvested the proceeds in equity (1%), property (2.5%) and cash (6.5%), asset classes less susceptible to rising interest rates.To increase diversity within its fixed income portfolio, the Philips scheme has also divested part of its remaining sovereign exposure away from euro-zone countries in favour of UK, US and Canadian government bonds.