EUROPE – Northern Trust says six multinational clients have committed around $4bn for pension pooling vehicles in Ireland and Luxembourg.
The Chicago-based bank said today that it launched its first multinational corporate pension client on the Irish Common Contractual Fund on September 1. Further clients on Luxemburg’s Fonds Commun de Placement vehicle are set to follow, executives said.
The bank has set up a funded vehicle for the new client, with three asset managers operating mandates, although it declined to reveal any names.
“This is real. It’s functioning right now,” said Kathy Dugan, product manager within Northern Trust's global institutional product group. There is a “groundswell” of interest in the area.
The comments come ahead of a conference on pooling in London tomorrow.
Earlier this year Northern Trust’s rival State Street said it had received enquiries from multinational corporations, some with pension assets of up to €20bn, about setting up a pension pooling deal in Ireland.
Kredietbank’s Luxembourg launched a €1.1bn pension pooling vehicle for the Suez-Tractebel group last February.
Dugan’s colleague, Luxemburg managing director Ian Baillie, pointed out that multinational firms were offering pooling as an option to their subsidiaries. He told a briefing today that the plans themselves make the decision and the asset allocation.
He said it was a “myth” that pooling was a way for corporate headquarters to take over local pension funds.
It also emerged that Northern recently hired Karen Zeeb from the Bank of New York as pooling implementation manager.
In May this year Northern said it boosted its pension pooling offering by developing a product that allows multinational companies to “commingle” US pension assets with non-US assets.