GERMANY – MAN has hired BNP Paribas as the global custodian for its contractual trust arrangement (CTA) – an external fund the engineering group set up last summer to finance pension liabilities.
BNP Paribas said that under the mandate, it would provide global custody, accounting and investment compliance monitoring for €500m in assets to be invested by MAN’s CTA.
Last June, IPE broke the news that MAN was removing €1.7bn in pension liabilities from its balance sheet to have them ultimately financed via a CTA.
The firm, listed on Germany’s blue-chip Dax index, said the move followed its adoption of International Accounting Standards (IAS). Under IAS, CTAs are treated as an ideal way of financing pension obligations.
In July, IPE reported that MAN had hired consultant Rauser Towers Perrin to advise it on the vehicle’s construction.
In terms of the CTA’s asset management, MAN has not disclosed the names of the managers it is working with. It has only said that it would “favour banking partners with whom we have a long relationship with”.
MAN is a Munich-based maker of engineering equipment and diesel trucks with 58,000 employees worldwide. Last year it had €765m in operating profit on sales of €15bn.
A multitude of other big German companies apart from MAN have set up CTAs for their pension liabilities. This has created a boom for asset managers, global custodians, consultants, solicitors and anyone else doing business in German corporate pensions.
According to Deutsche Asset Management, Germany’s CTA market in 2006 should reach at least €15bn.