Denmark’s PFA has confirmed it made a loss of DKK3bn (€403m) on the loan it made to Irish aircraft leasing firm Nordic Aviation Capital (NAC) three years ago, following the latter’s announcement on 20 December it is to file for US Chapter 11 bankruptcy.
Responding to recent media criticism of its overall returns for 2021, PFA – Denmark’s largest commercial pensions provider – said it had booked the whole NAC loan as a loss.
PFA said in a statement: “We’re really sorry about the loss in NAC. When we got involved with the company, it was a good, well-established and healthy company with a strong circle of owners.
“But with the coronavirus pandemic, the aviation industry was hit extremely hard and everything was turned upside down – not least for an air leasing company like NAC,” PFA said.
“We have done everything we could to protect the investment, but had to recognise that it was not possible,” it said.
The DKK730bn Copenhagen-based pension firm added that despite the loss from NAC, which it said had been “written off on an ongoing basis,” its alternative investments portfolio generated a return of 16.3% last year.
PFA said in the statement that it had also been criticised for taking too little risk in its investments in recent years – a phase when the equities market in particular had been booming.
“It has been a period in which there has been particular concern about the significance of the record low interest rate level for the financial markets after many years of upturn, especially in the equity markets,” it said.
The firm said the fact it had not benefitted fully from this upturn had led to a number of changes in the way it invested, and efforts to increase risk.
The pension provider said another of its investments which had led to criticism had been its approximate DKK4.5bn (€605m) stake in Danske Bank – a stock which had underperformed the market as a whole in recent years.
“When PFA bought the shares, it happened as the bank took decisive steps to rebuild confidence in the outside world and strengthen the business,” PFA said.
These measures had included replacing the bank’s management and board, along with the development of strict money laundering procedures, PFA said, but added that the share price had not developed as it had hoped in the short term.
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