Wednesday 27th August 2014
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South Africa’s central bank has disagreed with a ratings decision by Moody’s to downgrade Capitec Bank Limited (Capitec) by two notches, and place it on review for a further downgrade. The central bank says it respects the independent opinion of rating agencies but that it does not “agree with the rationale given in taking this step”. Two reasons are given for the rating action: a lower likelihood of sovereign systemic support based on decisions recently taken in relation to African Bank Limited (African Bank), and heightened concerns regarding the risk inherent in Capitec’s consumer lending focus. “With regard to the first point, it is important to reiterate that the approach taken by the SARB to any resolution to address systemic risk will always be based on the circumstances and merits of the particular prevailing situation. Decisions will also be informed, as was the case with African Bank, by principles contained in the Key Attributes for Effective Resolution Regimes proposed by the Financial Stability Board (FSB), which have the objective that a bank should be able to fail without affecting the system,” notes the central bank in an official statement. “This is in keeping with evolving international best practice. In the case of African Bank bond holders and wholesale depositors are taking a 10% haircut, which is generally regarded as being very positive given that the trades following the announcement of African Bank's results were taking place at around 40% of par. Therefore in fact substantial support was provided, not reduced. Moreover, all retail depositors were kept whole and are able to access their accounts fully,” it adds - According to the Hong Kong Monetary Authority (HKMA) credit card receivables increased by 2.1% in the second quarter to HKD112, after a reduction of 6.7% in the previous quarter. The total number of credit card accounts edged up by 0.7% to around 16.8m.The rollover amount, which reflects the amount of borrowing by customers using their credit cards, increased by 2.9% during the quarter to HKD19.2bn. The rollover ratio also rose marginally from 17.0% to 17.1% in the same period. The charge-off amount increased to HKD569mduring the quarter from HKD528m in the previous quarter. Correspondingly, the quarterly charge-off ratio rose to 0.51% from 0.46% in the previous quarter. The amount of rescheduled receivables transferred outside the surveyed institutions’ credit card portfolios reduced to HKD94m from HK$109m in the previous quarter. The delinquent amount increased to HKD249m at end-June from HKD239m at end-March. However, the delinquency ratio remained the same at 0.22% because of an increase in total card receivables. The combined delinquent and rescheduled ratio (after taking into account the transfer of rescheduled receivables mentioned above) edged up to 0.29% from 0.28% during the same period - Harkand has been awarded a contract to support Apache with inspection, repair and maintenance work (IRM) as well as light construction (LC) across their assets in the North Sea, following completion of a competitive tender exercise. The award includes the provision of vessels, ROV and diving services for a three-year period, plus two one-year options. The firm will also support offshore marine construction contractor EMAS AMC who have been awarded a separate contract for pipe lay and heavy construction as part of the same tender process. Harkand Europe managing director, David Kerr, said: “This contract is an important step in strengthening our close working relationship and growing our North Sea business with Apache.

West Midlands Integrated Transport Authority completes first Local Government Pension Scheme buy-in

Friday, 20 April 2012
West Midlands Integrated Transport Authority completes first Local Government Pension Scheme buy-in West Midlands Integrated Transport Authority (WMITA) has completed the buy-in of its pensioners with Prudential and the assistance of Mercer and Squire Saunders. This is the first  local authority involvement in UK’s buy-in market. With a premium in the region of £272m, this is the largest such transaction to date in 2012. http://www.ftseglobalmarkets.com/

West Midlands Integrated Transport Authority (WMITA) has completed the buy-in of its pensioners with Prudential and the assistance of Mercer and Squire Saunders. This is the first  local authority involvement in UK’s buy-in market. With a premium in the region of £272m, this is the largest such transaction to date in 2012.

West Midlands Integrated Transport Authority (WMITA) has completed the buy-in of its pensioners with Prudential and the assistance of Mercer and Squire Saunders. This is the first such transaction for any local government pension fund. With a premium in the region of £272m, this is the largest such transaction to date in 2012.

A buy-in is an insurance wrapper which provides payment of pensions for the insured section of a pension fund’s members. The Fund continues to be managed as before but the transaction gives them certainty over their costs. This is distinct from a buyout where the liabilities are fully transferred to an insurance company.

According to Geik Drever, director of Pensions at the West Midlands Pension Fund, the transaction forms an important part of the WMITA Fund’s risk management strategy, "and has insured  circa 50% of the fund’s liabilities. It has protected the fund and the sponsor against the volatility of investment markets and any unanticipated increases in life expectancy of the pensioners. Risk management is a very important part of local authority governance for both the main fund and the WMITA Fund, and as such this is a welcome outcome given the policies in place for the Funds as well as the Authority.”

According to Clifford Sims, partner at Squire Saunders, the law firm which advised the authority and its fund on the legal issues surrounding the transaction: “As in all local government contracts, the public sector procurement process, which requires great depth of transparency and objectivity, had to be followed. This transaction is the first time that these procedures have been entwined in the processes surrounding a bulk annuity transaction. Another feature was that the price was determined by an electronic auction process enabling the price to be settled in a matter of hours.”

Paul Middleman, fund actuary and head of Public Sector Consulting, adds, "Whilst we have seen this in the private sector this is breaking new ground in the sector in terms of local authority pension fund risk management for a sponsoring employer and ultimately the taxpayer. The transaction required a team with specialist knowledge and experience when determining whether it was the right option. Now one Fund has taken the plunge we could see this becoming a viable option for Funds when dealing with legacy liabilities as part of the governance around their risk management strategy."

Squire Sanders' team was headed by pensions partner Clifford Sims, assisted by senior associate Ohad Graber-Soudry on procurement issues and pensions associate Sian Williams. Global legal practice Squire Sanders, with 37 offices in 18 countries, has one of the largest pensions law teams in the UK. 

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