Lithuanian pension funds to merge
LITHUANIA - Invalda AB, the parent company of Finasta Investment Management, has bought Medicinos banko Investment Management.
The move is the latest development in a consolidation of the Lithuanian private pensions sector.
"Medicinos banko Asset Management is to be merged with Finasta Asset management," said Invalda president Darius Sulnis.
Finasta offers six pension funds - four second pillar funds and two third pillar funds -and Medicinos has two second pillar funds.
Both have been active since the start of a pension reform enacted in 2003 which from 2004 allowed employees to opt to switch a proportion of their contributions that are paid to the state pay old age pension to a second pillar private pension fund managed by specially licensed pension operations run by asset management companies and life insurance companies.
Medicinos banko Investment Management, which was sold by commercial bank Medicinos bankas, had failed to attract a significant number of clients and was the second smallest of the market players. At end-June it had 1,897 clients and assets under management of LTL1,009,183 (€292,279), giving a 0.34% market share by participants and 0.17% by funds. It's conservative fund, which invests solely in sovereign bonds issued by OECD countries and which all players must offer, was the best performing conservative fund in 2005 but the performance of its other fund was middling.
Finasta Investment Management is also a small player - with 5,844 clients and LTL12,590,499 in assets at end-June for a 1.04% market hare by participants and 2.1% by funds, but it is seen as one of the strongest companies in the sector, topping the performance league with all of its funds except its conservative fund which was ranked second in 2005.
Medicinos bankas, Medicinos banko AM's previous owner, has nine branches in Lithuania and its main customer acquisition strategy was through the bank tellers. Finasta AM's parent Invalda is one of the country's strongest financial and commercial conglomerates with considerable experience in the financial markets.
The rationale behind the merger was to gain market share, Finasta Asset Management director Andrius Barstys told IPE. The cost of the transaction has not been released.
Since 2004 Hansa's pension operation acquitted the pension business of Leituvos Draudimas, the former state monopoly life company, and DnB Nord bought the pensions business of life company Seesam.