GERMANY – DekaBank, the asset management arm of Germany’s state-owned savings banks (Sparkassen), has set up a contractual trust arrangement (CTA) for €222m in pension liabilities.
Deka said the move was part of its transition from German accounting rules (HGB) to international accounting standards (IAS) last year.
Under the new rules, CTAs, which are external pension funds, are considered an ideal vehicle for financing pension liabilities. The bank currently has almost 3,000 employees.
In the process of setting up the CTA, Deka said it had conducted an asset-liability study. Deka added that as an asset manager, it would be handling the CTA’s investing itself. The CTA’s strategic asset allocation was not disclosed.
Deka’s move is another indication that the trend toward CTAs has not just been limited to multi-national firms listed on Germany’s Dax-30 index. For example, BHF-Bank, one of Germany’s oldest private banks, created a CTA for €165m in pension liabilities last January.
Moreover, IPE first reported in January that DZ Bank, the central bank for German co-operative banks, had created a CTA for around €800m in liabilities. Now, the co-operative shareholders of DZ Bank have hinted that the institution might be floated on the stock exchange in the near future.
Separately, Deka said the volume of its funds for institutional investors – known as Spezialfonds in Germany – declined to €42bn at the end of 2005 from €43.9bn a year earlier.
Deka said the decline followed consolidation and closing of some funds as well as the loss of mandates caused by a decision by some investors to go with ‘master funds’. Master funds consolidate back-office administration of institutional funds to reduce costs and boost transparency for the investor.
Deka also said some of the decline was partially compensated for by the winning of advisory mandates, bringing its volume for this business line to €3.2bn from €1.2bn.
Still, Oliver Behrens, board member at Deka in charge of asset management, acknowledged that the fund company “had not fully profited from the growth in institutional asset management” which he put at 15% since 1996.
To amend this, Behrens said Deka would co-operate more closely with its Sparkassen and Landesbanken shareholders. “We will also tailor our funds more to the individual needs of institutional clients,” he told journalists at Deka’s annual news conference in Frankfurt.
Behrens joined Deka at the beginning of 2006 from Deutsche Asset Management, where he was in charge of German institutional business.