Banco Popular bailout costs Dutch healthcare scheme €1m [updated]

The failure and bailout of Spanish bank Banco Popular wiped out at least €1m of investments for the Dutch healthcare scheme PFZW.

Banco Popular was bought by Santander for the nominal fee of €1 last week after its real estate loan portfolio threatened to send it bankrupt.

PFZW’s loss came as a consequence of new European rules stipulating that shareholders must bear the financial burden of a bailout rather than taxpayers.

The €187bn pension fund’s stake was part of a passive investment portfolio managed by BlackRock.

According to a spokesman for PGGM, PFZW’s asset manager, Banco Popular was one of more than 2,700 companies in the FTSE All World Developed Markets index.

“On balance, the index’s result is always good, but negative exceptions are possible,” the spokesman said.

He added that BlackRock did not have much margin to deviate from the benchmark. However, the asset manager still sold half of the remaining equity earlier this year.

Peter Borgdorff, PFZW’s director, put the €1m loss into perspective by pointing out that the healthcare scheme had generated returns of €928m during the first quarter of this year, and almost €20bn over 2016.

Meanwhile, PME, the €45bn pension fund for the metal and electro-technical engineering industry, said it had lost €300,000 in a similar way to PFZW.

It added that it had sold most of its passive equity holdings in May as a consequence of a benchmark adjustment.

A spokesman for ABP said that the €389bn civil service scheme had divested its €5m equity holdings in Banco Popular in April, and a larger stake in credit one month later.

“Our policy of active investment and taking choices in time has paid off,” he said.

The spokesman added that ABP had acquired corporate bonds in Banco Popular early this year and had divested after making a “decent profit”.

PMT, the €68bn sector scheme for metalworking and mechanical engineering, said it had sold its holdings in Banco Popular – worth roughly €1.5m – at May-end, following MSCI’s announcement that the bank was no longer part of the index.

Rating agency Moody’s in its most recent Credit Outlook said that the resolution of Banco Popular’s problems had strengthened the credibility of the EU’s bank resolution regime.

However, it noted that the bank had fared relatively well in last year’s stress tests for banks, run by the European Banking Authority (EBA), and concluded that “the test’s methodology had revealed limitations in signalling potential failures”.

Moody’s also said that Banco Popular’s securitisations would benefit from the bank’s acquisition by Santander.

Have your say

You must sign in to make a comment


Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • DS-2382

    Closing date: 2017-12-14.

  • QN-2383

    Asset class: Residential Property.
    Asset region: Ireland.
    Size: EUR 10m.
    Closing date: 2017-12-18.

  • QN-2384

    Asset class: Equities Switzerland (Large Caps).
    Asset region: Switzerland.
    Size: CHF 550 – 600 mn.
    Closing date: 2017-12-15.

  • QN-2385

    Asset class: Liability Driven Investment.
    Asset region: Europe.
    Size: Size: EUR 1 Billion, Liability size: EUR 3 Billion.
    Closing date: 2018-01-08.

  • QN-2386

    Asset class: Fixed income.
    Asset region: Global developed markets.
    Size: CHF 500 -1000m.
    Closing date: 2018-01-15.

  • DS-2392

    Closing date: 2017-12-21.

  • QN-2393

    Asset class: All/Large Cap Equities.
    Asset region: Europe.
    Size: EUR 200m.
    Closing date: 2017-12-21.

  • QN-2394

    Asset class: Real Estate Industrial.
    Asset region: Europe.
    Size: EUR 10m.
    Closing date: 2018-01-04.

Begin Your Search Here