DENMARK – ATP is to overhaul its hedge fund subsidiary ATP Alpha, possibly halving its 35-strong team of staff, and bringing it closer to the pension fund's other investments.
The Danish statutory pension fund said: "As part of ongoing business optimisation, ATP has decided to reorganise ATP Alpha."
It said the aim was to strengthen its position in a "challenging" investment environment, which carried the prospect of a long period of low economic growth, low returns, significant risks and stringent financial regulation.
The subsidiary was set up in 2006 and has been run as an independent unit.
In June, it reported assets of DKK112m (€15m).
It invests in a wide range of financial markets such as equities, bonds, currency and commodities, with the aim of producing a stable return irrespective of long-term movements on financial markets, ATP said.
After the reorganisation, ATP Alpha will continue as an autonomous unit, but will in future be linked more closely to ATP's other investments.
"The strong and flexible investment platform, which has been developed by ATP Alpha, will be used by a greater proportion of ATP's investments," it said.
This would enable ATP to have even more control over its total investment risks as well as cutting costs, it said.
As part of the change, ATP said it was considering cutting staff numbers by just less than half.
The subsidiary currently has 35 staff.
In the 2012 half-year report, the return on capital at ATP Alpha had fallen to 0.9% before tax, from 27.3% in the same period the year before and 31% in the first half of 2010.
In other news, the chairman of PenSam Liv said he would resign over the trustee board's failure to cooperate and agree to fundamental change at the troubled labour-market pension fund.
The DKK60bn fund has called an extraordinary general meeting for 21 December to vote on trustee board changes including a proposed overhaul of the board's structure.
Thor Buch Grønlykke, chairman of PenSam Liv, told IPE: "It’s important for PenSam that we have a better climate of cooperation within the PenSam group, and in that regard we have had difficulty getting a proper work environment within the boards."
These difficulties related particularly to the trade union FOA, he said.
"The root cause of that is the differing views about the need for fundamental change in PenSam," he said.
Grønlykke is a regional council member of employers' organisation Danske Regioner.
PenSam Liv's deputy chairman – FOA chairman Dennis Kristensen – has not resigned his position.
Employer bodies Danske Regioner and KL have agreed with FOA on a number of measures they say will help PenSam Liv move forward and strengthen members' pension savings in the future.
Up to now, a representative of Danske Regioner has held the position of chairman while one from FOA has been deputy chairman.
Under the proposal, there would be two deputy chairmen, with one of them representing KL, the three organisations said.
The collective bargaining partners would relinquish two of their current six seats on the boards, with these being replaced by an independent financial expert.
In addition to the loss of these two seats, another three would go under the proposals.
They said: "This is partly in accordance with expert recommendations of the size of boards in financial companies, and partly to streamline decision-making processes."
The organisations said the new board would work together to implement initiatives to fundamentally address PenSam's problems with IT systems, high costs and decision-making structures, and ensure a focus on core tasks.
PenSam has faced sharp criticism for low investment returns and was reported to the police in October for failure to address the fact that many members had not received their annual statements.