NETHERLANDS - Dutch pension funds are reluctant to drastically expand their mortgages portfolio in order to aid bank de-leveraging, several of the country's leading funds have told IPE.
The funds were responding to proposals from Bernard Wientjes, chairman of Dutch employer lobby group VNO-NCW, to encourage pension funds to buy banks' mortgages portfolios - totalling €650bn - allowing banks the financial leeway to offer business loans and new mortgages.
Commenting on the proposals, a spokesman for the €261bn civil service pension scheme ABP said: "Rather than being money that can be spent for anything, pension assets need to be responsibly invested for the pensions of our participants.
"Among the core issues of responsible investing is the distribution of risk, which is at odds with investing an additional part of our assets in mortgages," he said.
"ABP has already a mortgages portfolio of 3%, and extending these investments by tens of billions is not sound," he added, saying that it would be likely that regulator De Nederlandsche Bank would "block such an allocation increase".
According to the spokesman, even an increase in the size of its mortgage portfolio of a few billion was not being considered.
Reluctance to invest was also found at €43.8bn metalworker fund PMT, with spokeswoman Annemieke Biesheuvel commeting: "We have difficulties understanding that pension funds should bear the banks' problems in financing mortgages."
"We prefer investing in property," she added, referring to her scheme's 1.5% real estate portfolio.
"Of course, we consider all options to invest in Dutch bank loans, if possible in joint projects with other pension funds," Biesheuvel said.
"However, this hasn't lead to any concrete investments so far."
Peter Borgdorff, head of the €118bn PFZW said that the healthcare fund had divested its mortgage portfolio in 2008 after it did not generate sufficient returns.
"However, we are prepared to take responsibility by reinvesting in mortgages, provided that the risk-return ratio is right.
"Rather than saving the banks, investing for our participants is our priority," Borgdorff said, adding that mortgages could help limit his scheme's inflation risk.
However, he questioned whether Dutch pension funds would be able to solve the banking sector's problems if schemes only invested 5% of their combined assets of €850bn in mortgages.
In the past, pension funds have been urged to deploy their assets for investments in infrastructure, care homes and schools.