Three of Italy’s casse di previdenza have announced they will not invest their money in Atlante 2, the country’s fund to rescue troubled banks, even though their industry association ADEPP had initially pledged the pension funds would in principle invest in the fund.
The three casse di previdenza – first-pillar funds for white-collar workers – are vets’ pension fund Enpav, the engineers and architects’ fund Inarcassa and industrial experts’ fund EPPI.
The pension funds said individually that investment in Atlante 2 failed to meet their requirements.
Inarcassa said its board of directors had unanimously decided in a meeting on 29 July against participating in Atlante 2.
“After comparing the asset allocation and internal procedures relating to financial policies, Atlante 2 has been judged to be out of line with the pension fund’s prudent basis, and not within the investment parameters that apply to it,” Inarcassa said.
But the fund did say its board had reiterated its commitment to invest in the country’s real economy, provided the risks and returns were in line with the growth expectations of an asset base that had to guarantee the future welfare of architects and freelance engineers.
Gianni Mancuso, president at Enpav, said that, despite the ADEPP’s support of the bank rescue initiative, its own board had unanimously decided against granting the request to invest in Atlante 2, asserting that it was not obliged to contribute to the debt restructuring of Monte dei Paschi di Siena, one of Italy’s biggest lenders.
He said the fund needed to respect its mission, which was to ensure adequate pension benefits to members, current and future.
“To do this, our investments have always been oriented towards more cautious and prudent choices,” he said.
However, Mancuso said Enpav would not hold back from offering its support for initiatives to revive the Italian economy.
But it will do this in other ways, he said, such as financing the renovation of school buildings, which would meet the needs of the population, contribute to overall economic recovery and possibly have a positive effect on its members’ profession, which has been severely hit by the economic crisis.
For its part, EPPI said technical evaluation of the investment in Atlante 2 had shown the risk/reward ratio fell outside the key parameters adopted by the fund in its asset management.
Early last week, the ADEPP, the umbrella association for casse di previdenza, agreed to support Atlante 2, which is to be created as a fund to invest in Italian banks’ bad loans, buying the debt at below-book value.
The initial contribution from the 19 members of ADEPP members was to be €500m.
But in an interview two days ago in the newspaper Il Sole 24 Ore, which was reproduced on the ADEPP’s website, the association’s president Alberto Oliveti cast doubt on the pension funds’ ability to invest in the fund, given the unfavourable pricing being discussed after the ADEPP made the pledge on behalf of its members.
He said the technical details of the investment had changed since the original proposal by the government.
“They were talking about purchases priced at 24% for 38% of nominal value, and today they are talking about 32%,” he said.
“We cannot give money in grants. We need a legitimate return expectation.”