RBS unveils buyout solution for German corporates
GERMANY - The Royal Bank of Scotland (RBS) together with insurer Ergo has launched a pension liability buyout service targeting German corporates with pension liabilities of €500m or more.
This is RBS' entry into the German market, and the firm aims to deliver "consultancy to corporations around the development of relevant strategies [to manage pension liabilities] and to help install and manage models such as a contractual trust arrangement (CTA) or Pensionsfonds", the company said in a statement.
Vijay Vankadari, previously with ABN Amro before being taken over by a the RBS-lead banking consortium, will manage the cooperation for RBS, a spokesman told IPE today.
The offering is specifically aimed at medium-sized companies who still have the pension liabilities on their balance sheet but do not want to launch their own Pensionsfonds or CTA.
"It is a building block system, whereby the company can detach parts of the pension liabilities from the balance or detach the liabilities completely and put them in a single arrangement in which RBS and Ergo will take care of both asset and liability management," the spokesman told IPE.
"In principle, this is comparable to a pension buyout solution," he added.
Bart Kuijpers, the deputy head of pensions and insurance Europe for the company, told IPE the new offering was launched on the back of a number of global risk mandates currently being implemented for German plan sponsors, which will see RBS help to restructure the corporate pension plans.
According to Kuijpers, there is an increasing demand from German corporations to detach unfunded liabilities from their balance sheet.
"You can do this via a pension buyout, but also by placing the liabilities in a CTA or a Pensionsfonds, an option RBS did not provide initially in Germany," he told IPE, adding RBS therefore began looking for a partner which could take care of the individual member administration as well as manage a Kapital Anlage Gesellschaft (KAG).
Through the cooperation RBS Asset management and Munich Ergo Asset Management (MEAG) will take care of the asset management, while RBS will handle the risk management and Ergo, a subsidiary of Münchener Rück, will do the administration and the pension management.
Ergo is also the party which will will provide the necessary reporting for regulatory authorities, such as BaFin.
RBS is part of a growing number of asset manager and insurer combinations seeking to tap into the German medium-sized corporate market to attract pensions money.
Earlier this year, Allianz announced it would roll out a similar solution, setting up new subsidiary Allianz Treuhand to serve its corporate pension clients as trustee. (See earlier story IPE.com: Allianz launches German 'fiduciary' service)
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