Not much sec lending left in Switzerland, suggests Swisscanto
15 May 2013 Switzerland
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The dramatic events that took place in the capital markets in 2008 have led pension institutions to rethink their approaches to securities lending, said Swisscanto in a survey report, adding that the practice was largely being withdrawn from in Switzerland.
The Swiss asset manager and fund provider鈥攚ell-known for its annual Swiss pension funds study鈥攕aid in its survey report that many funds are aware that the supposedly risk-free and temporary lending of securities contained dangers hitherto barely considered, such as counterparty risks, for which it may not be possible to compensate due to relatively low earnings.
Surveys on this issue have shown that smaller pension institutions have now largely withdrawn from securities lending and that many of the larger funds with more than 1 billion Swiss francs in assets have also given up a significant part of this business, it said.
An industry event earlier in the year found that Swiss pension funds were facing low lending fees and were concerned about reputational risk.
Swisscanto's survey also showed that pension funds are acting in a far more cost-effective fashion through being careful to keep expenses under control and to use any opportunities to make cost savings, both in general administration and capital investments.
鈥淚n fact, the costs identified and their development in the last few years are quite impressive,鈥� stated Swisscanto in its survey report.
"Since 2007, the total expenses for capital investments and administration of insured persons have been reduced by the smallest funds with less than 250 beneficiaries by almost 40 percent per head on average, from around 1170 to 720 Swiss francs, whilst the largest funds with over 10,000 beneficiaries have reduced their expenses per head by 20 percent from 430 to 345 Swiss francs, a similarly impressive amount in view of their significantly lower cost base.鈥�
The Swiss asset manager and fund provider鈥攚ell-known for its annual Swiss pension funds study鈥攕aid in its survey report that many funds are aware that the supposedly risk-free and temporary lending of securities contained dangers hitherto barely considered, such as counterparty risks, for which it may not be possible to compensate due to relatively low earnings.
Surveys on this issue have shown that smaller pension institutions have now largely withdrawn from securities lending and that many of the larger funds with more than 1 billion Swiss francs in assets have also given up a significant part of this business, it said.
An industry event earlier in the year found that Swiss pension funds were facing low lending fees and were concerned about reputational risk.
Swisscanto's survey also showed that pension funds are acting in a far more cost-effective fashion through being careful to keep expenses under control and to use any opportunities to make cost savings, both in general administration and capital investments.
鈥淚n fact, the costs identified and their development in the last few years are quite impressive,鈥� stated Swisscanto in its survey report.
"Since 2007, the total expenses for capital investments and administration of insured persons have been reduced by the smallest funds with less than 250 beneficiaries by almost 40 percent per head on average, from around 1170 to 720 Swiss francs, whilst the largest funds with over 10,000 beneficiaries have reduced their expenses per head by 20 percent from 430 to 345 Swiss francs, a similarly impressive amount in view of their significantly lower cost base.鈥�
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