The government also argued ESMA’s aim to harmonise financial stability measures across member states was not the correct legal basis to grant it powers of intervention.However, the court dismissed this argument and said ESMA’s ability to intervene did not exceed its original authority.It also argued that enough safeguards were in place to limit its power.With regards to the regulator’s discretion, the ECJ pointed out the authority was already controlled by various limiting conditions and criteria.It pointed out that ESMA could only intervene in markets if there were a threat to cross-border stability, and if “no competent national authority had taken measures to address the threat”.Furthermore, the court said ESMA was already required to ensure its measures addressed the threat directly, and did not create the risk of regulatory arbitrage or have a detrimental effect on financial market efficiency.The court added: “The powers available to ESMA are precisely delineated and amenable to judicial review in the light of the objectives established by the authority that delegated those powers to it.”It also said the provision in EU law that allows its decision-making powers could not be argued against in isolation, as the UK had done.It said the provision must be considered with all the rules designed to ensure financial stability and market confidence.Both ESMA and the European Commission welcomed the ruling.A spokesperson for HM Treasury, which took the case to the ECJ, said it was disappointed in the judgment, which saw the ECJ go against its Advocate General.In his opinion in September, the Advocate General – the court’s highest adviser – backed the UK government and said ESMA’s powers went beyond what could be adopted to achieve stability.The spokesperson added: “We’ve consistently said we want tough financial regulation that works. But any powers conferred on EU agencies must be consistent with the EU treaties and ensure legal certainty. We will now consider the judgment in detail and respond, in full, at a later date.” The UK government has lost its case against the European Securities and Markets Authority (ESMA) over its right to ban short selling in individual member states.ESMA’s current batch of regulation over short selling gave it the right to ban the practice if it felt financial stability in the European Union was at stake.However, the UK felt the regulator had been given too much leeway with regards to intervention, and that this was at odds with the EU’s principles on the delegation of powers.Taking the case to the European Court of Justice (ECJ), it said ESMA’s discretion was too political in nature.
The Commission said its proposals would make it easier for shareholders to exercise their existing rights and, conversely, create better operating conditions for listed companies, improving their competitiveness.It added that transparency, both by asset owners and asset managers, would be a focus of the Directive, as well as removing hurdles to exercising voting rights across national borders.The emphasis on the hurdles of cross-border voting was necessitated, according to the Commission, by over 40% of listed companies shares belonging to investors based outside the member state in which the firm was based.Addressing its proposal for a binding vote on pay, the Commission said that while it would not introduce a cap on executive remuneration, firms would be forced to put the recommendations of the remuneration committee to a binding vote.However, the policy put to vote would need to include an upper level on pay and “need to explain how it contributes to the long-term interests and sustainability of the company”, the Commission added in a statement.Additionally, the Directive would also introduce a corporate governance code based on a ‘comply or explain’ model, forcing firms that depart from the code to justify its reasons for doing so.The UK’s National Association of Pension Funds said it welcomed the idea of a more consistent shareholder rights framework across Europe.Will Pomroy, policy lead for corporate governance at the association added that its members had a “clear interest” in promoting the longer-term sustainability of its shareholdings and that it was therefore crucial to leave them equipped with sufficient information to challenge them.“Whilst the objectives of the Directive are positive,” he said, “and greater transparency around activities is beneficial, new disclosure requirements must be practical “Care needs to be taken to avoid unintentionally tying the hands of investors or creating a tick-box exercise at the expense of encouraging the right behaviours.” Investors are to be granted a binding say over executive remuneration in an effort to counteract what the European Commission regards as “harmful” short-termist tendencies by companies.Unveiling the revised Shareholder Rights Directive, internal markets commissioner Michel Barnier said that the past few years had shown “time and time again” the damaging effects of a short-termist agenda by European companies.“Today’s proposals will encourage shareholders to engage more with the companies they invest in, and to take a longer-term perspective of their investment.“To do that,” the commissioner added, “they need to have the rights to exercise proper control over management, including with a binding ‘say on pay’.”
PGB, the €16.3bn pension fund for the Dutch graphics sector and process industry, returned 5% on investments over the second quarter, and saw its funding ratio improve by 0.8 percentage points to 106.6%.Equity was the best performing asset class, with the 31.7% allocation returning 5.5%, leading to a year-to-date result of 7.3%.PGB’s 50.5% fixed income allocation returned 4.3% over the second quarter and 9% over the first half due to falling interest rates. Alternatives delivered 3.6% between April and June, while infrastructure and commodities returned 7.8% and 7%, respectively, over the same period. The pension fund said its quarterly result also included 0.5 percentage points’ of return from a combined interest and currency hedge.During the second quarter, the assets of the Pensioenfonds voor de Grafische Bedrijven increased by €1.9bn, in parts thanks to the transferred assets of pension funds joining PGB.It noted that its funding had improved “modestly”, as falling interest rates also increased PGB’s liabilities.In other news, the €2.8bn scheme of TNO, the institute for applied technical research, reported a quarterly return of almost 3.9%, including 1.3 percentage points’ of return from the interest hedge on its liabilities.It said its year-to-date result was more than 9%, including 2.6 percentage points from its interest cover.Equity, fixed income and property returned 1%, 3.7% and 1.3%, respectively.Private equity, with a loss of more than 0.5%, was the only asset class with a negative return in the second quarter.
Over the first four months of 2014, investors committed a further €2.3bn to fund investments, €1.1bn to secondary investments, €400m to co-investments and €200m to mezzanine investments.AlpInvest’s management board said growth reflected the increasing importance of private equity in developed economies, including many Asian countries.AlpInvest pursues opportunities across a range of private equity investment channels, such as primary, secondary and co-investments, covering buyouts, growth capital, ventures and mezzanine.In August 2013, the Carlyle Group acquired full control of AlpInvest through the purchase of the 40% stake held by the company’s management.Two years’ previous, the Carlyle Group and AlpInvest management bought the company from the large asset managers APG and PGGM, which signed substantial mandates to be committed for the period 2011-15. AlpInvest, the €61bn private equity investor, has reported a net return on investments of almost 20% for 2013, and said it based its positive outlook for all its investment activities on “continuing improving economic sentiment”.The company – one of the largest private equity investors in the world – added in its annual report that its net life-to-date internal rate of return was 11.1% last year.AlpInvest saw its aggregated capital commitments increase by €3.9bn to almost €61bn during the first four months of 2014, following a €4.5bn rise to 56.8bn last year.Currently, committed capital to investment funds and secondary investments amount to €38.6bn and €9.5bn, respectively, while assets committed to co-investments, mezzanine investments and direct investments were €7.9bn, €3.5bn and €1.1bn, respectively.
Guus Warringa, former general counsel at Dutch asset manager APG, has joined international investor law firm Grant & Eisenhofer (G&E). During his seven-year tenure at the €424bn asset manager, Warringa helped European pension funds to challenge the European Market Infrastructure Regulation (EMIR), as well as controversial European Commission proposals to levy a financial transaction tax (FTT).On behalf of APG’s main client, the €356bn civil service pension fund ABP, Warringa also played a leading role in lawsuits against Goldman Sachs, JP Morgan, Morgan Stanley, Deutsche Bank and Credit Suisse over the alleged mis-selling of collateralised debt obligations prior to the financial crisis.All of these cases were settled in 2013. Jay Eisenhofer and Stuart Grant, G&E’s co-founders and managing directors, said Warringa was a “tremendous addition” to the company.“His extensive experience and vigorous activism on behalf of institutional investors will be an incredible assets to our client base,” they said.Warringa said the law firm provided an “excellent platform” to continue his work on behalf of pension funds and other institutional investors, which have become “much more vocal and active in recent years”.“Joining G&E provides me with the opportunities to further support that process and strengthen the investors’ possibilities,” he added.Prior to joining APG, Warringa served as general counsel at Euronext Amsterdam.He has also held senior international positions within the NYSE Euronext group.Warringa started his career in private practice as a mergers and acquisitions lawyer.He holds a law degree from Leiden University and a Masters degree from Cambridge University.US-based G&E represents institutional investors from across the globe in securities class actions, derivatives lawsuits and financial litigation matters.
The founder of US bond specialist PIMCO, Bill Gross, is suing the company and its owner Allianz Asset Management of America for $200m (€176m) of bonus payments he alleges he was due, after colleagues ousted him from the firm.In a colourfully worded complaint filed in the California Superior Court in Orange County, Gross’s lawyers express his opposition to the “high-risk, high-fees” approach that had gained ground at PIMCO.The complaint – for constructive termination, breach of contract and breach of covenant of good faith and fair dealing – says Gross was well-known as an advocate for PIMCO’s investors.“He championed reasonable fees for PIMCO’s services and was vocally sceptical inside the firm of a select group of the younger executives’ desire to transform PIMCO into a high-risk, high-fee asset-management company that invested in riskier equities and leveraged real estate investments, as opposed to the stable bonds that built the firm’s reputation,” the complaint said in its introductory paragraphs. According to the complaint, for which a jury trial is being demanded, as long as Gross remained at the company, these younger executives could not transform PIMCO, increasing client risk and their own compensation.Because of this, Gross alleges he was targeted in a power struggle within the company that would eventually lead to his “wrongful and illegal ouster” from the company he founded.PIMCO, according to the complaint, “wrongly and illegally” denied Gross hundreds of millions of dollars in earned compensation.In the complaint, lawyers detail the huge bonus pool amassed at PIMCO to be divided among its managing directors.In 2013, for example, the profit-sharing bonus pool totalled $1.3bn, with Gross – who was entitled to receive 20% of it – given $300m from the bonus pool that year.The $200m he is suing for is equal to the bonus sum he alleges he was due in 2014 but not given because of the precise date of his departure.Gross left PIMCO in September 2014 and joined equities specialist Janus Capital Management.
The hedges, one for each of the two schemes*, were structured as “whole of life” insurance policies and are “named life”, which means that they cover named pensioners and contingent dependants. This is in contrast to index-based swaps that track a general UK population.The deals agreed with Zurich cover £600m of pensioner liabilities. Zurich retained 25% of the longevity risk, with the remainder reinsured with Pacific Life Re. A spokesperson for Zurich told IPE that the deals with Pirelli are the first time that Zurich has retained part of the longevity risk. “In the first transaction we completed in December, we passed on all the longevity risk to Pacific Life Re,” he said. According to those involved in the transactions, the transactions are noteworthy because they show that managing longevity risk via longevity swaps is also an option for smaller and medium-sized pension schemes.Andy Stewart, head of client solutions at Cardano and adviser to the Pirelli schemes, said: “Historically, named-life longevity swaps were only available to very large pension schemes but recent product development by providers such as Zurich means that small to medium sized schemes can now also access these solutions.”In 2015, Zurich and Mercer developed a pre-negotiated standard longevity contract, with a panel of reinsurers providing pricing. Those involved in the transaction said this “streamlines” the de-risking process for smaller and medium-sized UK DB pension schemes.Simon Foster, global head of Zurich International Corporate Solutions, said: “This transaction shows how two pension schemes can be grouped together to provide scale and therefore obtain more attractive pricing terms.”Tony Goddard, pensions manager at Pirelli, said that the longevity swaps add to steps the schemes have been taking to manage other risks within the pension funds.“We are pleased to continue this process with these transactions and to seize the early opportunity to hedge longevity risk,” he said.“The streamlined features of this longevity swap make this a cost-effective solution for the funds, with features such as no collateral requirements and transparent insurer and reinsurer pricing being particularly attractive,” he added.The Pirelli swaps are the second and third named-life longevity hedges to have been completed for smaller UK DB schemes using the approach developed by Mercer and Zurich.As at 30 June 2016 the present value of Pirelli’s funded UK pension liabilties were €1.26bn, according to Pirelli’s half-year report. In December 2015, Zurich carried out a £90m streamlined longevity swap with an undisclosed UK pension plan.The Electricity Supply Pension Scheme (EPSP), a £32bn industry-wide pension scheme, recently reported having hedged part of its longevity risk, with one of its sponsors agreeing a £1bn deal with Abbey Life.*Pirelli General Pension and Life Assurance Fund, and Pirelli Tyres Limited 1988 Pension and Life Assurance Fund The main UK defined benefit (DB) pension schemes of the Italian tyre company Pirelli Group have completed longevity swaps worth £600m (€707m), insuring the risk with Zurich Assurance Limited.The transactions are seen as a sign that the longevity swap market for smaller UK pension schemes is opening up, having previously been the preserve of bigger schemes.The transactions are understood to have been finalised in early August.Cardano and Mercer were investment and transaction advisors to the trustees of the pension schemes, respectively.
Roger Burnley, chief executive, Asda, said: “We have supported the scheme over many decades through significant cash contributions.“That funding, combined with strong stewardship by the scheme’s trustees, has resulted in the very positive situation where the scheme can now be transferred to an A+ rated insurance company, Rothesay Life, derisking the scheme and providing long term, sustainable support for its members.”Aon was lead adviser to the pension scheme trustees, alongside Addleshaw Goddard, Cardano and Lincoln Pensions.Mike Edwards, partner at Aon, confirmed to IPE that this was the Asda scheme’s first bulk annuity deal, adding that there was a trend emerging for large schemes to cover all their pension liabilities in a single transaction.He drew attention to the “immaturity” of the Asda scheme given that two-thirds of the members are deferred, noting that such long duration has “created pricing challenges” in the past. The buy-in is the latest in a string of derisking transactions for Rothesay, following recent deals with National Grid, Pernod Ricard and Telent. It is also the UK’s 10th longevity transaction over £1bn so far this year. Nearly £35bn of pension liabilities have been insured via bulk annuities this year. The pension trustees of UK supermarket Asda and its US owner Walmart have agreed a £3.8bn (€4.4bn) buy-in with insurer Rothesay Life.The deal covers all members of the Asda Group Pension Scheme – 12,300 in total, with 4,800 pensioners and 7,500 deferred members.Asda will make a one-off final payment into the scheme of some £800m, which is to be followed in due course by a full buyout, with completion expected in late 2020 or early 2021, according to a statement.The transaction, made partly to exploit “favourable market conditions”, will remove all future scheme liabilities from the Asda and Walmart balance sheets.
The chief executive of the manager of Norway’s now NOK10.12trn (€986bn) giant sovereign wealth fund has decided to resign from his role at the top of the organisation, but will carry on working at the fund particularly on renewable energy infrastructure, Norges Bank Investment Management (NBIM) has just announced.NBIM, which manages the Government Pension Fund Global (GPFG), wrote in a statement: “Yngve Slyngstad has informed Norges Bank’s executive board that he will resign as CEO in Norges Bank Investment Management.“Slyngstad will remain in his position until a new CEO takes up the position,” it said.NBIM spokespeople were not immediately available to say why Slyngstad had decided to make the move. In the statement, Slyngstad said: “It is an important milestone that the fund’s market value passed NOK10trn on 25 October. I am proud of having been part of building up a leading international investment organisation with talented and professional employees.”He said the organisation had delivered good returns “for the good of our community”.Øystein Olsen, chair of NBIM’s executive board and governor of Norges Bank, Norway’s central bank, said: “The executive board is very satisfied with the management of the fund under Yngve Slyngstad’s leadership.”Over the 12 years, Olsen said the fund had delivered very good results and achieved a strong position internationally and in Norway.“Yngve Slyngstad has been a distinct leader of Norges Bank Investment Management and developed a leading and global investment organisation,” he said.NBIM said its board would now start looking for a new CEO, and once one was in place, Slyngstad will continue working at the fund, “and contribute to the further development of the investment strategy”.“His responsibilities will include building up unlisted renewable energy infrastructure as a new investment area,” NBIM said.In April, NBIM was given the go-ahead from Norway’s finance ministry to invest up to 2% of the fund’s value in unlisted renewable energy infrastructure.Olsen said Slyngstad’s experience and insight would help ensure this investment area was established in a good way.Slyngstad was appointed chief executive of NBIM on 1 January 2008, having joined the organisation in 1998 to head up and build its equity management activities. Between 1998 and 2007 he was of head of equities.
Making good on one of its key election promises from last year’s campaign which brought the party to power, the Social Democrats said they expected about 38,000 people to be eligible for early pensions under the new rules by 2022.The government still has to negotiate with other parties on the reform, the bill for which comes to DKK3bn (€403m) a year. Under the plan, this cost will be covered by the state in the first few years and then from 2023, financed by reductions in tax breaks for the wealthiest as well as a “social contribution” from the financial sector.IPD said it understood the initiative’s intention to give work-worn people the right to earlier retirement, but was annoyed that its sector had to contribute to its financing.“In the insurance and pensions industry, our financial contribution to society is already large, and in our section of the financial industry we do our utmost to comply with the social contract and pay close to DKK30bn annually in taxes and fees to our common finances,” said Jan Hansen. Jan Hansen, IPD“Therefore, we believe it is wrong that this type of special tax is being imposed on us,” he said.The tax would reduce the pensions of individual people and would make it be more expensive for people to buy insurance, he said.On top of this, Hansen argued that the tax would reduce the opportunities to invest pension savings in the green transition.Meanwhile, Ulrik Nødgaard, chief executive officer of financial sector lobby group Finance Denmark, rejected the idea of one particular industry having to pay for specific welfare reforms, saying it was unsustainable for the whole of society.“In Denmark, how much of your earnings you have to pay [in tax] doesn’t usually depend on whether you make machines or loans,” he said.Looking for IPE’s latest magazine? Read the digital edition here. Insurance & Pension Denmark (IPD) has reacted negatively to yesterday’s launch of the Social-Democrat government’s radical plan granting early retirement to nearly 40,000 long-working Danes, taking aim at the financial sector tax that will help pay for it.Jan Hansen, deputy director of the industry association, said: “What is being presented today (Tuesday) may end up being expensive for ordinary Danes, if it becomes a reality.”The proposal is to be financed with a special tax from 2023 on the financial sector, which also affects the insurance and pension industry, the group said.The minority government of Prime Minister Mette Frederiksen yesterday revealed its proposal to give workers aged 61 or over the right to retire if they have spent between 42 and 44 years in the labour market.