European Commission must assess impact of ‘deeply flawed’ IFRS 9

first_imgThe chairman of the European Parliament’s Committee on Economic and Monetary Affairs (ECON), Roberto Gualtieri, has warned that the European Commission must honour its responsibility to assess the impact of a new financial instruments accounting standard.The warning comes as the Commission prepares to endorse International Financial Reporting Standard 9, Financial Instruments (IFRS 9) for use across the 28-nation bloc.In a 19 June letter, Gualtieri wrote: “We understand that the European Commission is about to suggest to the European Parliament and the Council to endorse the international financial reporting standard on financial instruments IFRS 9.”The new standard will then be subject to the European Parliament’s Economic and Monetary Affairs Committee own scrutiny processes. “However, given the relatively short scrutiny period ahead,” Gualtieri said, “we would like to already express our concern on whether the adoption of IFRS 9 is fully in line with the Commission’s better regulation approach.”The European Parliament recently passed a motion that was highly critical of both IFRS more generally and of the activities of the IFRS Foundation in particular.In the 16 June letter seen by IPE, the ECON chair notes that “IFRS 9 has not been subject to an impact assessment on its macroeconomic consequences and its effects on long-term investment.“Equally, there is no proper analysis of its consequences for crucial long-term investment.”The comments echo the concerns of many long-term UK investors and pension funds.Sven Giegold, a leading IFRS critic and Green Party MEP, told IPE: “The IFRS 9 standard is deeply flawed. It makes accounting of financial instruments even more complex and more pro-cyclical.“The EU commission has now to prove that IFRS 9 will not harm macroeconomic stability and long-term investment. In particular, a proper economic impact assessment has to be provided.“The Commission has to defend European interests in accounting rules rather than to follow a rubber-stamp approach.”The letter also calls on the Commission to set out the basis for the Commission’s adoption of the new standard.“In concrete terms,” it adds, ”we are wondering whether IFRS 9 will remedy the causes of the financial crisis, as mentioned in the De Larosiere report and fulfil the changes required by the G20 in 2009.“As IFRS 9 is said to extend the volume of financial assets measured at fair value, the new standard might even increase pro-cyclicality.“Additionally, in the course of fair value measurement, unrealised gains are also considered in the Profit and Loss Account, thus raising concern as to whether IFRS 9 is fully compliant with the Accounting Directive and the Capital Maintenance Directive.”MEPs have repeatedly complained that the Commission’s failure to conduct a full impact assessment of IFRS 9 means the effects of its new impairment rules remain unclear.The IASB launched its IFRS 9 project in 2009.The move came in response to calls for the board to reduce complexity in financial reporting and also to fix impairment.Critics of the board’s existing impairment rules in IAS 39 argue that, because they measure incurred losses rather than an expected lose, they lead to too-little-too-late recognition of losses on impaired assets.Despite the criticisms of the new standard, academics from the University of Mannheim Business School hailed it as an improvement to financial reporting.ECB chairman Mario Draghi subsequently admitted the European Systemic Risk Board had yet to conduct a financial stability assessment of IFRS 9 and would only do so during the course of 2017.MEPs have now urged the Commission to conduct their own assessment by no later than June 2019.The ECON committee questions, however, whether IFRS 9 does in fact add up to a simplification of accounting rules for financial assets.ECON chairman Gualtieri wrote: “[W]e would like to know how the Commission wants to solve the problem of the new standard IFRS 9 being even more complex than its predecessor IAS 39.”In particular, the lawmaker questioned the extent to which the new standard was compatible with the Commission’s Regulatory Fitness and Performance Programme and its commitment to reduce regulatory burdens and simplify existing laws.last_img read more

Strong emerging market growth helps Sweden’s AP2 to 3.7% half-year return

first_imgInvestments by Swedish buffer funds AP2 and AP3 achieved a return of 3.7% and 1.5%, respectively, in the first half of 2016, with the former’s emerging market bond investments performing best. AP2, the smaller of the two with SEK308bn (€32.7bn) of assets under management, posted a net result of SEK10.6bn and a return relative to its benchmark of -0.7%.Eva Halvarsson, chief executive of AP2, referred to the net return as “a stable return” and attributed this to having a diversified portfolio that can withstand “uncertain times”.“Despite turbulence on the financial markets, AP2 achieved a net return of 3.7% for the half year, and our total portfolio actually rose in value even during the final turbulent week in June,” she said. In the first half of 2015 the buffer fund posted a return of 5.2%, excluding costs.The relative return of -0.7% for H1 2016 is on the portfolio of quoted assets, excluding alternative investments and costs.“This underperformance was largely attributable to the market turbulence of June,” noted AP2 in its half-year report.Its emerging market investments, in equities and fixed income, contributed positively to the fund’s portfolio, it said, with the fund’s hedging policy partially offsetting an adverse impact from falling interest rates, a relatively poor stock market performance and the effect of a weakened Swedish krona.Emerging market equities and bonds returned 6.7% and 13.4%, respectively.This was followed by foreign credits returning 7.2%, foreign government securities 6.6%, and 5.5% from alternative investments, which includes domestic Chinese equities, private equity, and unlisted real estate.Foreign equities returned 4.2%.As concerns the domestic market, the fund’s equities portfolio produced a loss of 5.1% while Swedish fixed-income securities generated a return of 2.5%.Feeding into the half-year result was AP2’s disposal, jointly with AP6, of unlisted Swedish real estate company Norrporten. It was sold to Castellum for SEK14bn in “one of the largest real-estate transactions ever carried out in Sweden”.The first half of the year also saw AP2 implement a strategic allocation (1%) to green bonds, and reduce its allocation in Swedish bonds by 3%, mainly to the benefit of global credit.It also revised the foreign exchange hedging of unquoted assets.AP3, meanwhile, said that its inflation, fixed income and currency risk categories “made the largest contributions” to its total real return of 1.5%. That compares with 6.5% in the first half of 2015.  The SEK339bn buffer fund said it has outperformed its long-term static (LSP) reference portfolio by 2.9 percentage points since this was introduced in 2012.AP3 has also decided to make a push into green bonds, aiming to treble its holdings by 2018.last_img read more

IPE’s 20th anniversary celebrations

first_imgOn 28 March 2017, staff and friends of IPE gathered at Drapers’ Hall, London, to toast the magazine’s 20th anniversary.IPE would like to thank all our readers, sponsors, and staff past and present who have supported us during this period.In the April edition of IPE, we feature contributions from Keith Ambachtsheer, Theo Kocken, Saker Nusseibeh, Amin Rajan, and others looking back at some of the most important developments in the investment and pensions sectors during the last two decades.Special Report: IPE at 20last_img read more

France publishes FRPS rules for insurer pension funds

first_imgThe French government has published rules formalising the creation of a new type of pension fund in France, known as “fonds de retraite professionelle supplémentaire” (FRPS).It allows insurers to move certain types of pension business off their balance sheets and out from under Solvency II regulation into new vehicles. One of the motivations is to free up investment that would stimulate the French economy.The “ordinance” was published on Friday. It is the final legislative step in the creation of the new pensions vehicle, which is provided for in omnibus legislation known as Sapin II, after the economy and finance minister Michel Sapin.The government has previously estimated that some €130bn worth of assets would be eligible for the transfer to FRPS vehicles. The Sapin II law mandated the government to create these FRPS by way of an ordinance. It sets out myriad aspects concerning these vehicles, such as the financial and prudential rules. These include a requirement to undergo annual stress tests, maintain a “solvency margin”, and to invest according to the prudent person principle.last_img read more

IPE Views: Seeing climate change ‘actions’ for what they are

first_imgThese days, with climate change an ever more prominent issue for institutional investors, it is easy to get excited about the different initiatives and announcements that hit our screens on a regular basis. It’s important to see them for what they are, and to not conflate managing the risks and opportunities of climate change with action to mitigate it.The press release that landed in my inbox on Friday is a perfect example. It had all the ingredients of a classic “ESG” news story. There were the big, powerful investors – six named sovereign wealth funds, including Europe’s largest, Norges Bank Investment Management – and the buzzwords: climate change, long-termism, value creation, sustainability, transition risk, physical risk… But again, read the text and it is clearly about understanding, managing and reporting on the financial implications of climate change, which the framework depicts as a development or phenomenon the investors are powerless to affect.Engaging with companies is mentioned, but there is no commitment to do so – “SWFs may wish to engage” – and the objective is not to effect any change, but “to understand” aspects such as “the risk and opportunities associated with the climate change issues that the Paris Agreement is seeking to address”.A contact at a climate finance think tank tells me: “Implicit perhaps in the framework is the idea that climate risk management frameworks contribute to shifting capital allocation, but this is indeed not a given. Managing risks and having an impact in the real economy are indeed not the same thing.”Getting a group of major sovereign wealth funds with very different perspectives and political backgrounds to back such an initiative is no mean feat and could have an important signalling effect.Also, the communication about the framework does not pretend to be about trying to change the course of man-made climate change. The language is quite clearly about risk management and analysis – and, yes, opportunities.More powerful investors using their influence to push for more and better data and showing climate change is on their radar is a good thing. The “ESG space” is a broad church, harbouring investors that want to manage change as well as those who want to effect change. Given the types of issues dealt with in this field – from human rights to climate change – asset owners, asset managers and advocacy groups should be clear about their objectives.The framework can be found here. The six-strong group of major sovereign wealth funds has produced a framework on climate change to promote the integration of climate change analysis into the management of large, long-term and diversified asset pools, as I wrote on Monday.The question in my mind was – as it often is when presented with such initiatives – was this going to be about managing the investment impacts or implications of climate change, or addressing climate change itself? As objectives or motivations, the two are quite distinct.I found very little in the framework to indicate this was about the sovereign wealth funds seeking to actively contribute to the fight against climate change.There are some parts of the framework that come close to this, such as the section on “ownership”, where the document sets out the sovereign wealth funds’ expectations of companies.last_img read more

​AP1 beats AP4 after ‘constant evaluation of allocation strategy’

first_imgSwedish state pensions buffer fund AP1 reported a negative investment return of 1.8% at this year’s halfway point, but nevertheless outperformed its peer AP4 – last year’s pack leader among the four main national funds backing Sweden’s pay-as-you-go system.The second of the pensions buffer funds to report first half results this year, AP1 said the pandemic had entailed “constant evaluation of the allocation strategy based on a rapidly evolving situation,” and reported a drop in total assets to SEK355bn (€34.6bn) from SEK366bn at the beginning of this year.Teresa Isele, the Stockholm-based fund’s acting chief executive officer, said: “AP1 was well positioned at the onset of the crisis, which enabled us to increase our exposure to equity markets before the markets gradually recovered.”The fund said it went into the COVID-19 crisis with relatively low risk in its investment portfolio, which allowed it to step up risk early on as conditions improved. Some parts of its portfolio had still delivered good returns, AP1 said, such as the Swedish small cap portfolio and fixed income investments.Isele – who is stepping down next month to make way for permanent CEO Kristin Magnusson Bernard – said the crisis had caused a record increase in bankruptcies and unemployment in many countries due to measures to slow the spread of infection.“Meanwhile, the record stimulus packages from central banks and governments have led markets to become increasingly optimistic about a speedy recovery of the global economy,” she said.The fund’s interim report shows AP1’s annualised 10-year real return after expenses fell to 6.7% from 7.7% this time last year.Looking ahead, Isele said the market outlook gave “some cause for concern” because of increased global tensions and potential trade disputes, the impact of the pandemic in general and on politics, combined with higher indebtedness as a result of the stimulus packages.Last week, AP4 reported a -2.5% return for the first six months of 2020 – a result it saw as satisfactory given the turbulent markets of the reporting period.In 2019, AP4 made a 21.7% annual investment return – the strongest return among the four buffer funds behind Sweden’s income pension – while AP1 produced the weakest with 15.1%.Last year, AP1 decided to develop its asset management with new equities strategies and a new organisational structure, which Isele said in February 2020 were laying a better foundation for the fund to meet return targets, while also slimming annual costs.Looking for IPE’s latest magazine? Read the digital edition here.last_img read more

Former Dutch finance minister joins ABP board

first_imgABP considers Snel’s unsuccessful spell as deputy finance minister no obstacle to nominate him as a board member, a spokesperson said. “ABP has considered the sum of Mr Snel’s relevant knowledge and experience as a great combination in a strong CV. He is complementary to other board members and thereby a good addition to the board.”ABP president Corien Wortmann welcomed Snel’s appointment. “He brings a wealth of managerial experience in the public and financial sector and has a lot of expertise in how to run large executive organisations,” she said in a press release.Snel himself said he is excited to join ABP at a time of great change for the Dutch pension system.“I have followed the developments in our pension system with great interest. In these exciting and decisive times during which a new pensions system is being designed, I would like to contribute to reaching ABP’s goals: a good and sustainable pension for now and in the future.”Before joining the Dutch Cabinet in 2017, Snel worked as the representative for the Netherlands at the International Monetary Fund in Washington. he started his career at the Dutch ministry of Finance, where he worked as deputy director-general for Fiscal Affairs.He is also a non-executive board member at shipbuilder Royal IHC. He joined the board in June, after IHC had received a bail-out from the Dutch government to save it from bankruptcy.To read the digital edition of IPE’s latest magazine click here. Menno Snel will join the board of the €456bn Dutch civil service scheme ABP. Snel, who worked as a director of strategy and policy for ABP’s asset manager APG between 2009 and 2011, was forced to step down from his duties as deputy finance minister in December 2019 following a series of scandals at the tax office over child benefit payments.Snel will start in his new role on 1 September and will join ABP’s board to represent the interests of the employers succeeding Carel van Eykelenburg. He was nominated by the government.Between 2017 and 2019, Snel was deputy minister at the Ministry of Finance, responsible for the tax service which was left reeling by a series of scandals before and during his tenure.Snel stepped down last year after it turned out the tax office had incorrectly ordered hundreds of parents to pay back childcare fees, resulting in personal bankruptcy for a number of these parents.last_img read more

Perched high on the hill this home has impressive views and plenty of development potential

first_img50 Markwell St, HamiltonThe main bedroom is also here, featuring a walk-in wardrobe, an ensuite and access to a balcony with stairs leading down to a grassy, tiered yard with established gardens.Other features of the residence include solar panels and airconditioning.Agent Frances Roberts said the property’s position mixed perfectly with unlimited redevelopment potential.“Indulge your creativity — let the location inspire your vision for a multi-level home with options to either transform the existing architecturally-designed 1980s brick residence or remove and build new,” Ms Roberts said.“The dynamic potential of this versatile site will appeal to buyers and developers wishing to create outstanding and innovative residential options.” 50 Markwell St, HamiltonA staircase ascends to a study/library with built-in shelving, louvres and a voided ceiling space looking to an open-plan lounge and dining room below. Off a short hallway to the right of the study are two bedrooms with built-in wardrobes and shared access to a balcony, along with a casual living space and a bathroom. More from newsFor under $10m you can buy a luxurious home with a two-lane bowling alley5 Apr 2017Military and railway history come together on bush block24 Apr 2019Downstairs, the second level’s lounge and dining room has a wood fireplace and a wall of glass letting in ample natural light. Double glass doors then open to a tiled deck with a glass balustrade.Back inside, a kitchen and a bedroom with a walk-in wardrobe and an ensuite are to the right of the level. The kitchen enjoys leafy views through sliding windows, with features including spacious benchtops, dual sinks and high-quality appliances, along with a laundry nook.On the first level of the house is a second living room with tiled flooring and built-in cabinetry. 50 Markwell St, HamiltonPERCHED high on the hill this inner suburban home has impressive views and massive redevelopment potential.The three-storey, exposed double-brick house at 50 Markwell St, Hamilton sits on a 1285sq m block on two lots sits high on the eastern side of Hamilton Hill.It has expansive views to the river and Gateway Bridge and is accessed through a private road. Beyond a timber front door, timber walls and floors pair perfectly with exposed-brick feature walls and raked timber ceilings.last_img read more

This Kangaroo Point penthouse has expansive river and city views

first_imgMore from newsCrowd expected as mega estate goes under the hammer7 Aug 2020Hard work, resourcefulness and $17k bring old Ipswich home back to life20 Apr 202018N/39b Castlebar St, Kangaroo Point.To the right of the open-plan design is the main bedroom, with bi-fold glass doors opening to the main balcony. The bedroom has carpet flooring and a walk-through wardrobe leading to an ensuite with twin showers, bathtub and dual basin vanity. There is also access from the ensuite to a separate balcony.Close to the main bedroom is access to a cinema room with an ensuite boasting a shower, and an adjacent bedroom featuring built-in wardrobes, an ensuite with a shower, and access to a southwest-facing balcony.Beyond the kitchen and towards the rear of the apartment are two bedrooms, each with built-in wardrobes and access to separate southwest-facing balconies. The larger bedroom also has an ensuite with a shower. 18N/39b Castlebar St, Kangaroo Point.STYLISH and spacious, this expansive penthouse has impressive views along the Brisbane River and towards the Story Bridge.The residence is the only apartment on level 10 of the Castlebar Cove development at Kangaroo Point with the internal floorplan covering 331sq m with another 121sq m of external balconies to the front and rear of the accommodation.Floor-to-ceiling sliding glass doors and bi-fold doors both open from the northeast-facing dining and living areas to a wraparound, covered balcony taking in the river and bridge vistas and featuring a wetbar and built-in barbecue.Overlooking the living and dining areas, featuring tiled flooring and a fireplace, is an impressive kitchen with European appliances, stone benchtops, a breakfast bar and floor-to-ceiling cabinetry. 18N/39b Castlebar St, Kangaroo Point.Also with access to the main balcony is a pool room with built-in fridges and bi-fold doors opening to the balcony. Close to the pool room is a powder room and other features in the apartment include a laundry room, intercom and airconditioning. There is also a five-car garage. Place marketing agent Simon Caulfield said Castlebar was renowned for its state-of-the-art resort-style facilities including a heated swimming pool, gym, spa, two plunge pools plus dry and steam saunas. “The barbecue pavilion provides ample dining areas, manicured lawns and landscaped gardens which complement the property’s 74m river frontage,” he said.last_img read more

Park Ridge property sells for $1m after just one week

first_imgThe property at 185-191 Park Ridge Rd, Park Ridge, sold for $1 million.WHERE there once was bush, now developers and families are finding exciting opportunities in the suburb of Park Ridge.Your Address agent Roslyn Watts, who recently sold a four-bedroom home at 185-191 Park Ridge Rd for $1 million after just one week on the market, said the area gave the buyers, a family with teenage boys, everything they wanted.“They just loved it with its proximity to everything,” Ms Watts said. “It was private, that’s what they loved about it.” Inside 185-191 Park Ridge Rd, Park Ridge.The residence was on a 2.02ha block.More from newsDigital inspection tool proves a property boon for REA website3 Apr 2020The Camira homestead where kids roamed free28 May 2019Ms Watts said the local market at Park Ridge had taken off. “It’s only just started in the last two years,” she said. “As stuff comes on the market it just sells.“Because of all the development out there at the moment, stuff just doesn’t seem to sit.” This room had been used as a sewing space.She said land was fast disappearing as developers bought larger lots, and that the suburb represented a trend in Brisbane’s urban fringe.“It happens all the time: good spot, good position, they’ll sell,” Ms Watts said. “It’s very busy in the development areas.”center_img Out in the backyard.Data from Realestate.com.au shows that the top three demographics of Park Ridge were older couples and families, established families, and elderly singles. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 9:24Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -9:24 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD288p288pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenCoreLogic Brisbane Housing Market Update – August 201809:25last_img read more