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Impact Investing

IPE special report May 2018

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Greek asset law expected soon

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New legislation due to be
passed in Greece later this
year is expected to create an
open institutional market worth
around €33bn to asset managers
within three to five years, according
to Haris Makkas, CEO of ING
Piraeus Asset Management in
Athens.
There are around €23bn of assets
under management, and these form
the pension assets of compulsory
state-guaranteed auxiliary pension
funds.
However, for 77% of these assets,
management means nothing more
than placement in deposits and state
bonds with the Central Bank of
Greece.
The legislation was originally
introduced in 2002 to liberalise the
investment framework for the auxiliary
state pension funds and to open
the way for occupational funds to
relieve the mounting burden on the
first pillar. It is also intended to open
the way for the formation of occupational
pension schemes.
“Once the legislation has liberalised
the management of the state and provided
a proper tax incentive for occupational
pension schemes, the asset
management market in Greece will
grow very fast,” says Makkas.
“The full €23bn of auxiliary state
schemes will be opened to independent
management and the occupational
schemes will grow to around
€10bn within that time.”
The legislation has not yet taken
effect because the position of the
occupational funds regarding tax
incentives is unclear, and as a result
companies have been reluctant to
invest money in them. However, the
new legislation will clarify the tax
position by introducing tax incentives.
With Greece running a budget
deficit in excess of the 3% allowed for
membership of the euro, any measures
that involve the creation of tax
breaks have proven to be very delicate
issues for the government, and this
has contributed to the legislation’s
delay.
Furthermore, with the national debt
at 120% of GDP, the government is
keen to maintain demand for state
bonds to finance the debt demand,
which will decline if the management
of the state auxiliary funds is liberalised.
As a result of the government’s
financing issues, some managers are
asking whether the government's
promise that the legislation will be
passed by the end of the year will be
fulfilled.
“I am not so sure that we will see the
new legislation this year because of
the difficult issues that the government
is facing,” says Eleni Koritsa,
deputy general manager at Eurobank
Asset Management in Athens. “We
have been waiting for liberalisation
since 2000.”

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