FRANCE – The 16 billion-euro French pension reserve fund has made some critical comments about the standard of some asset managers’ applications for mandates.

“The quality of the applications is good on the whole,” said Jean-Louis Nakamura, finance director of the Fonds de Réserve pour les Retraites, in an interview. “However, some asset managers did not understand that we are driving our call for tenders under the French rules which are stricter than those set out in the EU directive.”

“For example, there is no question of negotiating the mandates; some managers have some difficulty in understanding this point.”

He added: “It is very important that applicants answer exactly the questions asked. Although we were very clear in our request for proposals and in our rules of tendering that there would be no room for negotiation, some of the asset managers have taken a very ‘industrial’ approach in that they gave standard answers to questions that are not the standard questions found in this kind of process.”

Nakamura said the winners would be announced by mid-May, later than the expected date of the end of the first quarter of 2004.

The proposals will be assessed according to three criteria. The first is the quality of the management process and how compatible it is with the fund’s financial process. The second is the quality of the operational and risk control. The third criterion is price.

“Some applications diverge on the first two criteria,” said Nakamura. “For example, we have strict requirements in terms of the different levels of risk management and control: we want these levels to be independent and separate from one another and that the procedure should be clear and tested on a regular basis.”

“Some applications meet this criteria, some don’t.”

In December the fund announced that it had completed the first phase of its 16 billion-euro tender process - with 137 of the 410 applications going through to the second phase.

The FRR tendered 27 asset management mandates together with 12 stand-by mandates.