KAS SELECTIONS Volume 19, issue 4, November 2012
Kempen & Co Strengthening infrastructure through direct link KAS BANK in Nordics KAS BANK and dwpbank start joint venture for retail securities processing in Europe KAS BANK and Solvency II Screen Event Conference on ‘Taxation and the latest developments in the pensions landscape’ OTC Derivatives under EMIR Fort lawyers The ‘Ultimate Forward Rate’: could this really be the final version? Risk management conference Improving returns in securities lending EU Short Selling Regulation Words from Wiesbaden: Depotbank
KAS Selections KAS Selections is a quarterly newsletter from KAS BANK N.V. Although the information in this issue is drawn up with the utmost precision, no rights can be derived from it. Volume 19, Issue 4, November 2012 Contents: Foreword 2 Kempen & Co 3 Strengthening infrastructure through direct link KAS BANK in Nordics 5 KAS BANK and dwpbank start joint venture for retail securities processing in Europe 6 Laurens Vision 8 KAS BANK and Solvency II 10 Screen Event 11 Conference on ‘Taxation and the latest developments in the pensions landscape’ 12 OTC Derivatives under EMIR 14 Fort Lawyers 16 The ‘Ultimate Forward Rate’: could this really be the final version? 19 New Clients 21 Personnel notes 21 Risk management conference 22 Global Custody Network News 26 Improving returns in securities lending 27 EU Short Selling Regulation 28 Words from Wiesbaden: Depotbank 30 Comments on this issue, suggestions for future articles and mailing list requests should be addressed to: Netherlands Client Management: Managing Director mark.schilstra@kasbank.com Sales & Business Development (S & BD) Managing Director mark.van.weezenbeek@kasbank.com German Branch Managing Director frank.vogel@kasbank.com KAS Investment Servicing GmbH CEO & Managing Director joerg.sittmann@kasbank.com UK Branch Managing Director laurens.vis@kasbank.com Translation: Wilkens c.s. Text editor: Robbert Veltman Editor: Carla Boogers KAS BANK N.V. Marketing & Commercial Development P.O. Box 24001, 1000 DB Amsterdam The Netherlands +31 20 557 5812 carla.boogers@kasbank.com Graphic Design: Ebbenhorst Design, De Meern Print: KAS BANK, Document & Systems Services
Foreword Singing your own praises isn’t really the done thing – but I would like to make an exception. To receive one award is wonderful (as European Custodian of the Year), but winning two accolades in one evening is even better. At the European Custody Risk Awards ceremony in London on 20 November, KAS BANK took two awards: one for our Pension Fund Monitor app as ‘Technology Innovation of the Year’, and the second as ‘Custodian of the Year – Netherlands’. In the opinion of the independent jury of financial specialists from various sectors, the app has launched a revolution by allowing administrators real-time access to the pension fund’s main parameters. The app also makes a significant contribution to the education and decision-making processes of pension funds’ trustee boards. As Dutch Custodian of the Year, KAS BANK was particularly praised for its pure-play strategy and the bank’s low risk profile, which it consciously strives to maintain. While we are naturally proud of these two prestigious awards, we regard them above all as a reward for our close partnership with our clients in developing new services and products for the financial sector. Pilots and brainstorming sessions are one important aspect of this, but we also value your feedback greatly in all other spheres of our services. On behalf of all our employees, I would thus like to express our sincere thanks for your close involvement in KAS BANK. We owe these awards to you! We concentrate mainly on services to ensure you remain in control of your administration, your reporting obligations and your investments. This issue of KAS Selections contains several examples of this, such as the columns on EMIR and Solvency II. Our conferences held in KAS BANK’s auditorium provide an opportunity to share the latest developments with you, on national and European legislation and regulation. This time we report on our conferences on the taxation of pension funds, and risk management for pension funds. The engaging presentations by our specialist guest speakers ensured a lively exchange of opinions. Our staff regularly speak at external events too. At the ‘BeleggersBeraad’ (Investor Deliberation) event organised by IPNederland, Mark Schilstra highlighted the consequences of the introduction of the UFR for pension funds. At the Screen Event in Amsterdam, Albert Röell chaired the concluding panel discussion ‘From credit crisis to regulation crisis?’ The signature of our partnership agreement with dwpbank is, of course, another important subject in this KAS Selections. The launch of this joint venture heralds the creation of the new retail securities processing platform for the Dutch and European market. We are bringing you up to date on recent developments. In our series of articles about the businesses behind KAS BANK’s clients, we put the questions to John Hak of Kempen & Co., who sheds light on a variety of issues including the impact of financial regulation and the debate surrounding funding levels at pension funds. This issue of KAS Selections is so jam-packed that I lack the space here to mention all the subjects it covers. Apart from that, I’d like to take this opportunity to wish you a prosperous 2013. After all, looking ahead is a form of being in control. Sikko van Katwijk Managing Board of KAS BANK
In the second instalment of our series looking at the businesses behind KAS BANK’s clients, John Hak Chairman of Kempen & Co sheds light on a variety of topics, including the impact of more rigorous financial regulations on his business and the debate about pension
John Hak,
funds’ funding levels.
Chairman of Kempen & Co
How would you describe the corporate culture at Kempen & Co?
us to excel with those products. Our funds in high dividend
Kempen & Co is far from being your average bank.
equities, small caps, credits, real estate and alternative funds
A traditional bank deploys its capital and the funds entrusted
all offer alpha and have won a variety of awards in recent
to it, whereas all we have to offer our clients is ourselves:
years.
our knowledge, our experience, our creativity and our
As indeed has our securities business. One example are the
determination to be the best. As a boutique competing with
extel ratings, the industry’s ‘Oscars’, which are awarded on
bigger, international institutions, we are well aware that
the basis of input from businesses and investors and which
people won’t automatically gravitate towards Kempen – and
have revealed for many years now that our analysts, sales
that once they have chosen Kempen, we have to earn that
people and traders are regarded by our clients as some of
trust afresh, each and every day. That awareness is very
the best in the industry.
much a part of Kempen’s culture and the mindset of our employees, who are all professionals wanting to be the very
The financial world is contending with
best they can be, and to bring out the best in each other.
increasingly strict regulation, Basel III, AIFMD,
They have the courage to take that responsibility on board
MiFID, EMIR and FATCA being a few examples.
and want to be held accountable. We realise that it’s not
How is Kempen & Co preparing for this, and
what we do that makes us unique, but who we are and how
what role should your custodian play?
we do it, working with one other and with our clients.
You’re quite right, there’s a whole raft of new regulations affecting the financial sector. Although not all of these
What is Kempen & Co’s strategic vision for
regulations have a blanket impact on a specialised player like
preserving its ties with its clients?
Kempen & Co, implementing the laws and regulations that
We must fulfil our client’s expectations. Better still, we must
do apply to us involves a great deal of effort, and we are
exceed them. At Kempen Capital Management, one of the
keen to draw on the knowledge and expertise of other
ways we do this is by offering holistic, bespoke solutions to
parties in the market to assist us. KAS BANK has also given
challenges faced by pension funds and insurers when
us some useful input for certain aspects of the laws and
managing their investments in relation to their commitments.
regulations. By and large, we are confident that we will
We also offer specialised investment products for which we
adapt our systems, processes and procedures in good time.
have to realise a structural alpha. The fact that we have
One thing that does concern us somewhat is the level
made strategic choices about the products we offer enables
playing field with foreign competitors. In matters such as KAS Selections • November 2012
3
inducements, share categories in Dutch investment funds
are achieving growth outside the Netherlands in our core
and remuneration, the Dutch policymakers and regulators
sectors: indirect real estate, life sciences and cleantech.
take a different approach in certain respects compared to
We’ve been involved in dozens of capital market
international policymakers and regulators. Given that we are
transactions in these sectors over the past two years.
operating on an international playing field, this could make
Almost 70% of those were European transactions. In our
us less competitive.
business, we’re no longer a Dutch bank, but, increasingly, a European bank with Dutch roots.
As an asset manager, what’s your stance
We are, in some respects, relishing the crisis. Bigger
regarding the debate surrounding pension
financial institutions are being forced to concentrate on a
funds’ funding levels?
limited number of activities. The activities on which we focus
First, it’s obvious that pension funds are struggling to meet
are often not core activities for these big players, so they are
their nominal commitments right now. This will still be the
being abandoned or sold. We can then step in and claim a
case, even after the new ‘regulator’s curve’ has been
bigger share of the market.
implemented. What’s more, in the next few years, it will be virtually
In your opinion, how will the financial sector
impossible to offer inflation indexation. For the sake of
look five years from now?
participants, let’s hope that inflation doesn’t rise too fast,
I expect the latest developments and measures to engender
because pension funds are ill-prepared for this eventuality.
a growing awareness in the sector that the client must not
In that scenario, funding levels may well recover, but pension
be sold what he is willing to pay for, but what he needs. This
payments will lag way behind in real terms. The regulations
is also essential so as to restore trust.
in their current form are based on nominal figures, making it
I also expect a sharper distinction to emerge between big
difficult to respond to the expected higher inflation.
financial institutions focused on capital-intensive and
There has also been a lot of debate, of course, about the
ICT-intensive services and products, and specialised
curve applied for discounting commitments. The choice of a
boutiques focused on knowledge-intensive services and
UFR-related curve presents no problems for us as an asset
products. In the ‘new reality’, assets must be employed
manager – particularly as we have already implemented
chiefly for the benefit of the client, substantially higher capital
similar curves for our insurance company clients. In general
requirements apply and products are simple and
terms, however, I think you have to be critical of rather
transparent. In this reality, sufficient scale is a prerequisite for
artificial approaches. It’s like feeling too warm indoors: if you
a sustainable earnings model in capital and ICT-intensive
merely replace the device that measures the temperature,
services and products, such as lending and payments. For
that won’t actually reduce the heat in the room.
knowledge-intensive services and products, such as asset management, private banking and corporate finance,
How is Kempen & Co responding to the
attracting and retaining top talents and providing an
financial crisis in Europe, as regards the
environment that inspires them is the key to success.
persistently low volumes on various markets
I believe specialised boutiques are best placed to do this.
for example?
Obviously, I regard Kempen & Co. as an example of this
As a specialist, we have chosen to focus on a select few
latter category.
activities in which we excel. At times like this, we really reap the benefits of this approach. We are stemming the tide. Our asset management business has grown strongly in recent years, on both the product and the fiduciary management side. As for our securities business and corporate finance, although we are faced with lower volumes in the Netherlands, and this despite a growing market share, we
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KAS Selections • November 2012
Strengthening infrastructure through direct link KAS BANK in Nordics As a General Clearing Member with direct membership of
Direct Connection (I)CSD
CSD’s Euroclear Nederland, Euroclear Finland and VPS in
Direct Connection CCP
Norway, KAS BANK now also offers clearing, settlement
Via custodian network
and custody services to traders in Northern Europe. This marks another milestone in the further expansion of our market position in the Nordics. KAS BANK allows its clients direct access to all the main European stock markets. The Scandinavian market – the fourth largest securities market in Europe – is becoming increasingly important to KAS BANK. Through our direct link to the securities infrastructure in the Nordics, we now offer our clients direct access to the Scandinavian market as well. Conversely, Scandinavian banks and brokers also have
KAS BANK has been handling post-trade services for
direct access to stock markets outside Scandinavia through
Neonet in Europe since 2003. Neonet manages an
KAS BANK. Combined with our direct links to NYSE
execution platform on which it offers its clients access to the
Euronext, the London Stock Exchange and Deutsche Börse,
complex and fragmented European securities market.
we now cover the four biggest securities markets in Europe.
Neonet’s services are focused mainly on smart order routing (SOR) and direct market access (DMA). Neonet does not
This direct link is an addition to our clearing services in
engage in proprietary trading or any other financial activity
Sweden, Finland and Norway and will enable us to offer
that might constitute a conflict of interest with its clients.
improved services:
While banks and brokers are its primary target group, it also
• Tighter settlement deadlines
offers institutional investors the opportunity to trade directly
• Lower risk and greater efficiency
via the Neonet platform instead of through their own asset manager – affording them a direct insight into how
We will continue providing a service to clients who operate
purchases and sales are executed, and for what fees.
on the Danish market through our sub-custody network.
For institutional parties, this information is important for accountability purposes and for keeping check on
Minority interest in Neonet
movements in their own assets.
In order to further consolidate our position in the European infrastructure, we have acquired a 20% minority stake in
The other new shareholders of Neonet are investment
execution service provider Neonet AB. The stake in Neonet
company Hay Tor Capital and the incumbent management
will enable KAS BANK to further develop its European
of Neonet. Current owner Nordic Capital Fund VII will
post-trade services, in anticipation of the increasingly
continue to be involved in the Stockholm-based business as
stringent requirements for transparency and best execution
a minority shareholder.
under the European MiFID II Directive, which is expected to come into force next year.
KAS Selections • November 2012
5
KAS BANK and dwpbank start joint venture for retail securities processing in Europe Following intensive preparations, on 26 September 2012
Joint venture
KAS BANK and dwpbank signed an agreement
The agreement adds a fourth focus to KAS BANK’s range of
establishing a joint venture for a new European securities
services: servicing retail clients. The market is crying out for
platform. It will be based in Amsterdam.
a player who can handle large volumes of securities transactions efficiently – a tall order which relies on flawless
In the joint press release with dwpbank in December 2011,
processing. The new platform is capable of handling millions
we clearly explained to the market our aims and vision for a
of wholesale and retail transactions each day.
European infrastructure. Back then, it seemed both
The new joint venture aims to be the market leader in
advisable and feasible to establish a new securities platform
processing securities transactions in the Netherlands by the
for processing retail securities transactions in Europe in the
end of 2018. The range of services will be extended to other
summer of 2012. As time went on however, the realisation
European markets in the second phase of the joint venture.
dawned for both parties that it was better to take proper stock of our shared aims, and to flesh out our ambitions
The joint venture offers the following benefits to banks and
before establishing the platform. This process culminated in
financial institutions considering moving their securities
the partnership agreement with dwpbank which we signed
processing elsewhere:
on 26 September. The start of a joint venture and the opening of a dwpbank branch in Amsterdam mark a
Economies of scale
milestone on the road to realising our shared ambitions for
• Low fixed costs in an uncertain market, due to a unit-
growth. Both parties are therefore totally committed to this end result, and we can focus all our energies on making the
based pricing model • Lower unit prices thanks to the bundling of volumes
platform a success.
From left to right: Karl-Martin Im Brahm Rolf Kooijman
Markus Walch
Albert Röell
Christian Tonnesen Sikko van Katwijk
dwpbank
dwpbank
KAS BANK
dwpbank
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KAS BANK
KAS Selections • November 2012
KAS BANK
Management of operational risk
To actively involve clients in the change process, we are
• Outsourcing of process and trading risks
setting up a Client Control Board. Clients who are interested
• Completely redundant system architecture
in taking part will be fully informed of changes, involved in
• System availability of 99.9% of the time in the last three
those changes and have a say in setting priorities and
years
identifying scope for improvements.
Scope benefits
Trailblazing
• With the new platform, clients are assured that their
As a bank, there have been many instances in the past
securities transactions will always be processed using
when we have successfully blazed a new trail. Through our
the latest technology and in accordance with all the
dialogue with clients and the market, we have ascertained
applicable laws and regulations (Target2-Securities,
that they are interested in our partnership with dwpbank and
MiFID) and the various tax systems or other national and
are responding positively to it. Talks about the new platform
European regulations.
and KAS BANK’s wholesale services for dwp clients in
• No costs incurred for the timely implementation of legal provisions (such as FATCA)
Germany are underway with various parties. Together, we are adding a new dimension to the service-oriented KAS BANK.
Wholesale services Its partnership with dwpbank will also enable KAS BANK to optimise its growth opportunities in Germany still further. With this in mind, dwpbank is providing KAS BANK with support for the provision of wholesale securities services to dwpbank’s institutional clients and to German financial institutions – reflecting the high level of confidence in KAS BANK’s wholesale services. We are increasingly recognised and valued in our specialist field in Germany. Client Control Board The change of control over processing from KAS BANK to dwpbank was originally scheduled for the summer of 2012. However, further investigation revealed that more time would be needed to build a completely new platform. The wholesale knowledge of our processing staff is a key factor in this process. To ensure that the process is handled with all the necessary care, the transfer of around 150 operational staff to dwpbank’s new Amsterdam branch is now scheduled to take place in 2015.
KAS Selections • November 2012
7
Laurens’ View Memories of dramatic events
into a state of deep crisis); in pensions (today’s pension
are collective phenomena. As
crisis is the equivalent of the perfect storm); in the political
time passes, details start to
arena (the political crisis in the country has reached a critical
fade (supposedly from three
juncture with Congress thrown into a deep crisis); in
months onwards) and the
meteorology (authorities are seeking crisis communication
event becomes distorted,
systems to cover the global warming crisis after series of
finding its way into the stories
high impact weather crises); in medicine (bitterly contested
of our past.
health reforms throw hospitals into crisis amidst a fresh political crisis); in humanitarian issues (homeless migrants bring a humanitarian crisis to our doorstep); in the military
When disaster strikes, the most telling visible witnesses are
(rapid crisis response severely threatened by lack of
the broken-down homes, the devastated buildings, the
operational crisis guidance); in culture (our cultural system
ravaged infrastructure, the meltdown of communications,
faces the biggest crisis of legitimacy ever) and last but not
the spike in disaster coverage newsreels.
least psychological (economic crisis dramatically increases adults’ vulnerability to physical and mental crisis).
Because broken buildings equal broken people. And broken people predict the danger of a broken social fabric. And our
It seems that words fail us to make as many versions out of
fellow men responsible for ‘the news’ are in business, while
a crisis as the media are capable of. And the economic crisis
we, the bystanders, watch in fear and anxious anticipation
is a case in point.
for the recovery to present itself, for the rescue teams to move in, for the familiar structures to reappear and to once
Small wonder that the word crisis itself is derived from the
again provide shelter and domestic safety for the homeless.
original Greek word ‘krisis’, coming from ‘krinen’, to draw a line, to separate. Which stood for ‘a decision’ and was used
But where are we when no such thing seems to happen and
to describe a turning point, a time when a decision must be
the story of recovery does not (seem to) unfold? What if the
made.
back-end of one disaster leads into an even worse one as a result of it? What if the return to what was, gives way to a
Today, the word crisis stands for a sequence of events,
seemingly permanent deviation from the normal state of
describing the economic crisis as the economic and financial
things. It is then that we know: we are in a state of crisis.
situation around the world. Because, as we are reminded many times, the economic crisis manifests itself in our day
These days it appears that the very meaning of a crisis is in
and age on a global scale. And it truly has become a global
crisis itself. We are practically inundated in crises every day,
crisis. Even more worryingly, it has progressed to becoming
the media are hammering home crisis left, right and centre.
‘an ongoing crisis’.
Irrespective of the area of our endeavours, we seem to be heading towards, to be in or to be going out of a crisis.
Decisions are at hand, but the necessary decisions have not been made, due to the (you guessed it) ongoing governance
Crises are on the loose in finance (the European debt crisis
crisis and the dysfunctional marketplace being in a state of
and dysfunctional banks are bringing the Global Economy
crisis.
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KAS Selections • November 2012
Because it did get squeezed, in varying degrees of intensity,
The Chinese knew of this all along and use the word crisis
it failed and was drawn into the process of being dislocated.
(wei-ji) in many words of motivation. Their word for crisis
The tensions spread to money markets (worldwide), the
stands for how to handle danger (wei) and see the
crisis became ‘systemic’ and liquidity stopped flowing from
opportunity (ji) at the same time. Chinese characters tend to
cash-rich banks to cash-poor banks.
have many different meanings. But in this case the word wei circles lightly around fear in its different meanings, while the
Markets slumped (as if they disappeared into quicksand
word ji points towards a ‘favourable juncture of
never to surface again), plunged and plummeted (as if in free
circumstances’ and a ‘good chance for advancement or
fall), spiralled downwards (as planes collectively dropping
progress’.
from the sky), collapsed outright (implying a sudden catastrophic event resulting in the total destruction of all
But for now, as we are heading towards the inescapable
created market value), crashed (as always ever popular) and
end of the year, I wish you a good, healthy and happy
flash-crashed (a new version of the traditional crash), melted
cross-over into the New Year. But do keep your eye on
down, or, at best, took a downturn (which is what markets,
Christmas please. For the sake of us all. You might have to
annoyingly, tend to do before they start to rise again).
protect it against an impending crisis. Because it is now considered to be the most financially ill-prepared time of the
In short, we entered the language of crisis. Where are the
year, caught in a crossfire between credit card companies
days when markets falling more sharply than normal were
and crushed under the very weight of the debt crisis.
called black or ink-black coloured Mondays, Wednesdays and Fridays? Black is the colour of crisis against which
Wei-ji (危机) is the word!
we try to protect ourselves by means of crisis plans drafted in crisis departments by crisis management teams. The crisis button is never far away. Can we plan a crisis? A phenomenon, as the name suggests, that defies collective wisdom and defeats what we believe to be normal. Should we keep trying to do so? With all our might, devices, regulations, protocols and hierarchical structures? Because crises can also be productive. They destroy creatively (otherwise known as Schumpeter’s – the economist – gale), they create such a state of affairs that forces radical change in the socio-economic system (Karl Marx’s concept) and they announce themselves when we have passed the point of no return before it is too late. And they necessitate radical measures to present and preserve another spell of security which we believe to be a normal, permanent and safe environment.
KAS Selections • November 2012
9
KAS BANK and Solvency II KAS BANK’s
A study by Ernst & Young reveals that almost 80% of
Solvency II
Europe’s insurers have made little progress in implementing
project team
the pillar 3 reporting requirements, although Dutch insurers
has mixed
are doing better than their European counterparts in this
feelings about
regard (60% - 70% have made little progress). The reasons
progress on
cited are the complexity of the reporting requirements and
implementing
the challenges in terms of process and system adjustments.
Solvency II. Although
These issues are also recognised by KAS BANK’s Solvency
Meir Elmaliah, Account Manager
another delay is
II project team but, in spite of the difficulties and the
Fund & Insurers Services
apparently on
ambiguity of the regulations, the systems at KAS BANK are
the cards, the
in the final development phase. EIOPA has chosen a number
situation is very vague. It seems to be the intention of the
of data elements and identification codes that are not widely
European regulator, The European Insurance and
used in the market, if at all, and that are also not normally
Occupational Pensions Authority (EIOPA) to postpone the
offered by data vendors as part of their existing services.
implementation until 1 January 2015 at the earliest.
Here we, and the market in general, are dependent on third
De Nederlandsche Bank (DNB), however, is hinting that
parties. Setting up a high-quality look-through service
parts of Solvency II may be implemented, even if EIOPA
presents another challenge. As well as being a requirement
postpones its implementation until after 1 January 2015.
for Solvency II, this service is in keeping with a wider market
Meanwhile, the European Parliament has delayed the vote
trend towards a stronger focus on risk management and
on the Omnibus II Directive from 20 November 2012 to
compliance.
11 March 2013. Thanks to KAS BANK’s independent position, we see This uncertainty surrounding the implementation date makes
ourselves as a natural player in this development: after all, an
it difficult to finalise the timetable for the Solvency II project.
asset manager has nothing to fear from any disclosure of the
Progress by European insurers is slower than anticipated,
look-through data supplied to us. KAS BANK is immune to
particularly on aspects that are still far from being finalised.
issues such as conflicts of interest or loss of competitive
One of those aspects is pillar 3, the reporting requirements.
advantage, because we are not involved in areas of advice
The relationship between the reports is not always clear and
or management.
logical, the format of the reports is likely to change and the interpretation of the data elements is not set in stone.
To round off our asset-related Solvency II services, we have invested in the essential post-QRT report steps, i.e. the
The persistent uncertainty about the implementation date
scenario analyses or stress tests. Thus we are now able to
has prompted some regulators to incorporate certain
handle the entire process for insurers and relieve them of all
components of Solvency II into existing local laws, thereby
their asset-related activities.
introducing tighter supervision of insurers in certain respects. This is happening in the UK, Germany, France and the Netherlands. The danger with this is that it may result in a hotchpotch of unharmonised local regulations – negating one of the aims of Solvency II.
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KAS Selections • November 2012
Screen Event The Amsterdam Screen Event was held on 27 September, on the theme of ‘Dealing with uncertainty: new realities in the financial information services industry’. Screen is a one-day event for the financial sector consisting of a conference and an exhibition. KAS BANK had a stand. At the conference Albert Röell, Chairman of KAS BANK’s Managing Board, chaired the concluding panel discussion ‘From credit crisis to regulation turmoil?’ Albert Röell, Chairman KAS BANK’s Managing Board models were considered. The option of partial outsourcing and consultancy was discussed at length, stressing the importance of concluding sound Service Level Agreements. Next up for discussion was the question as to whether the sector exerts sufficient influence on the key players in the legislative and regulatory landscape. Opinions on this were The panel, made up of Carolien Boog (Syntrus Achmea
very mixed.
Vermogensbeheer), Remko de Jong (APG Asset Management) and Frank van de Ven (Mn Services),
On a more philosophical note, the participants considered
discussed with the audience how businesses can best
whether, by implementing all the regulations, the regulator
prepare for implementation of the relevant legislation and
will achieve the pre-defined goals, or whether there will be
regulations governing the financial sector.
unforeseen consequences? The new system risks under EMIR were cited as an example, because some CCPs may
The lively debate began with consideration of a number of
soon become too big to fail. There is also the risk that the
possible implementation models for the imminent laws and
more stringent capital adequacy requirements under
regulations. As well as abandoning certain aspects of the
Solvency II will dissuade shareholders from investing in
existing service range, the ‘in-house’ and ‘aggregator’
companies. Last up for discussion was the basic premise of the new regulations – namely, that they restore the focus on the client. It isn’t inconceivable that there will be unintended side effects for the end client, or that new rules will converge. The measures relating to derivatives transactions, for example, might have a significant impact on the capital charge.
KAS Selections • November 2012
11
Conference on ‘Taxation and the latest developments in the pensions landscape’ Three topical issues were the main focus of the
Prior to the transfer, both the transferring party and the party
conference on ‘Taxation and the latest developments in
taking over the fund must weigh up the interests of all the
the pensions landscape’, held on 4 September 2012 in
stakeholders carefully. There are also a number of
partnership with Loyens & Loeff: Is our pension system
mandatory communication steps, such as a final letter from
still future-proof? What measures must be taken to make
the transferring party, an introductory letter from the party
the pension system efficient and flexible? What is the
taking over the fund, and a uniform pension overview.
thrust of the recent case law of the European Court of
As well as getting legacy costs in order, SMART agreements
Justice as regards pension funds’ VAT liabilities and
between the old and new administrator are very important.
discriminatory withholding taxes?
Equally important are clear agreements between the Boards of Trustees of the pension funds involved and the continuing
Ernö Kalmár, Manager of Marketing and Sales at pension
involvement of the pension fund directors on both sides. The
services organisation Timeos, described how the process of
progress of the entire process can be checked against Key Performance Indicators. A member of the audience asked to what extent, when a fund is integrated, allowance is made for cultural differences, which are often a major stumbling block when organisations join forces. In Kalmár’s opinion, it is very important to retain the look and feel of the fund being integrated. A ‘Sector
‘integrating’ pension funds into an industry-wide pension
Committee’ serves as a forum for making agreements on
fund – in this instance, the Pension Fund for Graphic Design
how best to preserve the fund’s identity.
Companies – works in practice. Essentially, the motives for
As regards including the pension fund’s commitments in the
making the transition are the same for every pension fund,
company’s balance sheet, this has no implications at the
and include economies of scale and better prospects for the
present time. Under the current accounting rules, pension
participants. Another consideration behind the decision to
assets are regarded as a single investment pot when the
integrate into an industry-wide pension fund rather than
individual schemes are retained – so they do not constitute a
transferring the fund to an insurer, is the lower costs of asset
multi-company pension fund.
management. A growing number of companies are also wondering whether running an independent pension fund is
Joël Wessels, Tax Consultant at Loyens & Loeff, then
still part of their core business. In this respect, increasing
considered the options open to pension funds for paying
numbers of funds are either no longer willing, or no longer able to satisfy the increasingly stringent governance requirements. What’s more, after the transition, both sides (management and labour) remain in charge of the content of their pension scheme and enjoy a fair amount of freedom in managing the parameters of the scheme’s structure.
12
KAS Selections • November 2012
less VAT. Under Dutch law, Dutch pension funds provide
One of the questions raised by the audience was whether the
VAT-exempt services as long as they handle the asset
discriminatory deduction options for VAT encourage pension
management and implementation of the fund themselves.
funds to transfer their asset management to a provider
If these activities are outsourced, VAT will immediately be
outside the EU. In Wessels’ opinion, tax considerations are
charged, because the fund is then receiving VAT invoices
not normally a major factor in the investment decisions of
from external suppliers. Since VAT was increased with effect
large investors such as pension funds. If the implementing
from 1 October 2012, this can push up their costs by 21 per
body is spun off or split off (outsourcing), the agreements with
cent.
the tax authorities have to be reviewed. In this event, the
They can avoid this by applying VAT exemptions, deducting
‘exemption for cost-sharing groups’ can usually be claimed.
VAT or charging the VAT costs through the employer. However, to be eligible to do this, they must fulfil the criterion
Erik Bobeldijk, left (Head of the Tax Department at
of ‘management of assets raised by investment funds and
KAS BANK) and Ronald Wijs, right (Partner and Tax
investment companies for collective investment’. In the
Consultant at Loyens & Loeff) then delivered a joint
Netherlands however, the assets of an institutional investor are regarded as individual assets, not as a collective investment fund. To clarify whether this constitutes unlawful differences in tax treatment, the Court of Appeal in Leeuwarden has submitted some preliminary questions on this issue to the European Court of Justice. Among other things, the Court of Appeal is seeking a ruling on whether a pension fund in which assets are contributed and invested by
presentation on dividend withholding tax refunds which, for
or on behalf of participants and in which the participants
pension funds, are an important means of increasing the
share in the proceeds, can be classed as a ‘common
return on their investments.
investment fund’. One complicating factor in the Netherlands
Most EU states charge withholding tax on dividends as an
is the new option to establish a ‘premium pension institution’
advance levy on wealth tax. Refunding this tax is regulated by
(PPI). Management services for PPIs are exempt from VAT,
European treaties or bilateral tax conventions. Despite this,
because defined contribution is deemed in law to be a
local pension funds are often entitled to a refund of
collective asset.
withholding tax, whereas foreign funds are not. Under European law, this constitutes an unlawful hindrance. This
For many years, Dutch pension funds have had the practical
paves the way for Dutch and foreign pension funds to submit
option of reaching agreements with the tax authorities
claims for a refund of withholding tax in the EU Member
regarding certain exemptions or a reduced rate for services
States. Because of the EU principle of the free movement of
subject to VAT. Pension funds are only liable for VAT, for
capital, funds outside the EU, including Switzerland, can also
example, with regard to trading in securities. As this activity is
submit claims.
VAT-exempt, pension funds do not, in principle, deduct VAT
Ronald Wijs pointed out that a good cost benefit analysis is
– the exception being transactions with non-EU parties, for
necessary when making a claim. In some countries, being
which VAT is deducted. Given that the counterparty’s
right in essence is not the same as actually being proved
domicile is usually difficult to ascertain, practical agreements
right. To be proved right, you often have to fight your way
on the percentage deduction are based, among other things,
through a lot of red tape or arrange full translations of all the
on the location of the stock exchange on which the
relevant documents in order for your claim to be considered.
transaction is settled. Agreements can also be made
Although European case law will gradually eradicate the
regarding administrative services, and pooling investments is
differences in treatment, completely equal treatment is not yet
another option for the exemption or deduction of VAT.
in prospect, given that countries seek to preserve their tax sovereignty as far as possible.
KAS Selections • November 2012
13
OTC Derivatives under EMIR The require
deal must be registered no later than one day after the
ments and
conclusion/amendment/close of the transaction. ESMA has
consequences
published a standard template with all the details that have
of EMIR have
to be provided. The exposure and collateral of each deal will
been explained
have to be reported on a daily basis. The challenge will be to
at great length
combine information from different systems (such as the
in recent issues
derivatives files and collateral system) in good time, so that
of KAS
the trade repository receives full and accurate data.
Selections. Edgar Kooter, Sales Director Institutional
Time, now, for
Risk mitigation requirement
Services
a brief summary
EMIR requires market parties who conclude non-cleared
of the back
OTC deals to take risk-mitigating measures with regard to:
ground and implications of the regulation for pension funds and insurers, the solutions KAS BANK offers, and a few questions that need to be answered.
• Confirming the deal: OTC derivative transactions must be confirmed as soon as possible (by electronic means); • Portfolio reconciliation and compression: agreements on this must be recorded in writing. For larger portfolios, the
Background
parties must conduct six-monthly reviews to determine
In response to the impact of the credit crisis, the G20
whether the portfolio can be restructured with fewer
decided to introduce even tighter regulation of the global
derivatives and larger notionals;
OTC derivatives market. In Europe, this intention has been
• Dispute resolution: the parties must agree mutually, in
formalised in the European Market Infrastructure Regulation
advance, the procedures and processes for identifying,
(EMIR). The regulation requires trading parties to:
recording and monitoring disputes about deals,
• clear standardised OTC contracts centrally
valuations or the exchanging of collateral;
• trade via trading platforms (SEFs) for standardised OTC derivatives (where possible) • notify all OTC derivatives to trade repositories • tighten up their risk management with respect to uncleared OTC derivative transactions.
• Valuation: deals must be valued at mark-to-market. Only if this is not possible is mark-to-model permitted; • Collateral: The margin frequency will be increased to daily valuation and collateral matching for each currency. The expectation is that counterparties will have to provide collateral using a method similar to that applied by a
Central clearing
CCP. This could mean, for instance, that initial margin
The European Securities and Markets Authority (ESMA) will
has to be exchanged (which could be held by a third
supervise compliance with EMIR and stipulate which OTC
party custodian).
derivative classes are eligible for central clearing at a CCP. To begin with, it is likely that Interest Rate Swaps (IRS) and
(Relative) exemption for pension funds and
Credit Default Swaps (CDS) will be subject to the EMIR
insurers with pension activities
clearing requirement.
Pension funds and insurers are exempt from central clearing until August 2015. However, the expectation is that the
Compulsory reporting to trade repositories
costs of bilateral clearing of OTC derivatives will increase
All market parties (both financial and non-financial) are
substantially. Parties currently exempt will therefore decide
required to report all derivative deals to a trade repository
to settle these transactions through central clearing
(i.e. including the parties who are exempt from clearing). The
(voluntary clearing), because of the impact on banks’
14
KAS Selections • November 2012
solvency of bilateral OTC derivative transactions in the wake
In operational terms, the indirect implications of EMIR for
of Basel III.
pension funds and insurers are much more far-reaching. • How do I integrate OTC derivatives in my investment
The implications of EMIR
administration and related reports? • How can I optimise my collateral and liquidity
The direct implications of the regulation for the parties
management?
affected are obvious. To enable central clearing, a clearing member must be designated who is a member of the
• How do I guarantee independent supervision?
preferred CCP. KAS BANK can fulfil this role for you.
• How do I ensure that I am always in control?
However, our open architecture also allows you to choose
• How do I keep my systems up to date?
one or more third-party GCMs.
• How do I report my transactions and positions and
Once the transaction is complete, it must be reported to the
ensure that I continue to comply with the latest regulatory
repository and – for the duration of the contract – collateral
requirements?
etc. must be moved, reconciled and administered on a daily
Provided the above issues are handled correctly, EMIR
basis. There are various ways of structuring this process.
could be a source of great opportunities for you.
KAS BANK’s solution KAS BANK provides all the facilities necessary so that you can fulfil the requirements set by EMIR: Requirements under EMIR Clearing via CPP
Trading via platform
Reports to repository
Risk mitigation requirement
Reducing system risk
Increasing price transparancy
Regulator can check positions
Improving management of credit risk
KAS BANK as GCM or as intermediary
Institutional Risk Management & Treasury
Investment Management Services
Institutional Risk Management & Treasury
(non cleared transactions)
KAS BANK’s (EMIR) solution
Custody
Clearing & Settelement
Other services
• Derivatives clearing, execution and administration • Consolidated overview of all positions with all parties/CCPs • Collateral and liquidity management optimised in a pool • Up-to-date information for effective risk management • Single source for all relevant reports, including to regulators, and information • Performance and compliance management
KAS Selections • November 2012
15
lawyers Receivers are a special client group at KAS BANK. We spoke to Frits Kemp, lawyer and administrator at legal firm Fort, about bankruptcies, insolvency law and the special requirements when dealing with a bankruptcy account. Who are Fort and what is your specialisation? Fort is an Amsterdam-based legal firm operating nationwide. The office was established almost 40 years ago, but in its early years it traded under a different name and as a small full-service office. In 2000 we decided on a complete change of track. Today Fort employs some 30 specialised lawyers, who only handle financial corporate law and property law.
Frits Kemp, lawyer
The advantage of our concept is that we are big enough to
and administrator at
provide highly specialised, bespoke services, but small
Fort lawyers
enough to do so at competitive rates and to operate with permanent, regular contact people. Increasing numbers of
limited company. The law on limited liability companies has
business owners are seeking the right lawyer for the right
been more flexible since the new law was introduced on
job. In our segment, you won’t always find that at a large
1 October 2012, so the ‘flexible limited company’ is the
firm in the Zuidas district of Amsterdam. Costs are obviously
limited company as we know it, but subject to an
also an important factor: on average a large firm is twice as
overhauled law.
expensive.
The impact of the financial crisis on our clients is becoming increasingly apparent to us. Banks are still withdrawing
Which market developments are most relevant
money from the market and cancelling loans, often in
to you?
stages, spread over a number of years. Business owners are
We’re seeing a rise in ‘prepacks’, an approach to
rightly protesting about this, because the implications are
bankruptcy whereby the administrator in a bankruptcy is
far-reaching and they’re having to arrange refinancing at
named several weeks in advance. This means the right
gunpoint, so to speak – often involving big, personal
approach can be discussed ahead of the bankruptcy
commitments by directors or stakeholders, such as
proper. Following the ruling, any plans for a restart can get
guarantees. The worst-case scenario, bankruptcy, is a
underway immediately. The drawback is that this isn’t very
frequent outcome. I always say to my clients: call me
transparent, which means it can be difficult to get creditors
immediately if, instead of your usual account manager, you
and employers’ organisations on-side. This is a frequent
get a call from somebody in Special Asset Management.
occurrence in England though: the new business can be up and running just one hour after the bankruptcy ruling.
Of which networks are you a member and how
A prepack can avoid a downward spiral. Rumours of
do those networks affect the way you work?
bankruptcy are never good for the relaunch of a business.
It’s really important to be notified quickly of things like the
Between 6,000 and 7,000 bankruptcies are expected next
cancellation of a loan, refinancing, personal guarantees and
year in the Netherlands – and that’s not including the
so on. Many business owners are far too quick to throw in
self-employed without staff, because they are covered by
the towel. Only a handful of firms have the legal expertise to
debt restructuring laws. It’s more about the new, flexible
provide proper support with these credit issues. I think we
16
KAS Selections • November 2012
are just about the only firm with the required expertise that
properly and promptly, have the courage to follow your own
doesn’t have a permanent relationship with one of the
convictions and aren’t afraid of drastic measures. With
well-known banks.
hindsight, we only regret the things we didn’t do, never the things we did. So a company director who has run into
What activities do you undertake with regard
stormy weather mustn’t rely solely on the advice of his
to insolvency law?
bank’s Special Asset Management department, and he
I’ve always been involved with insolvency law. I act as a
mustn’t just plough on regardless with his regular lawyer. My
lawyer for our clients, primarily in finance-related disputes.
advice is: please seek out a true specialist, without delay.
I’ve also been appointed as an investigator by the Enterprise
This might sound odd, but even the bank will appreciate it
Section of the Amsterdam Court of Appeal and I’m
greatly: it indicates that you aren’t sticking your head in the
appointed as administrator by the district court. The
sand, but are taking the problem seriously.
‘highlight’ for me so far was my appointment in the Kroymans bankruptcy in 2009; the company employed
What conditions does your firm believe a
4,000 people and had a stock of more than 8,000 luxury
bankruptcy account must fulfil?
cars. I learned a lot from that case and I’m certain that you
The money that an administrator gathers together must be
can always identify a structure, a permanent thread, when a
carefully managed. In a bankruptcy, a supervisory judge is
company runs into difficulties. The recurring themes are
always appointed as well as an administrator, to supervise
overfinancing, restructuring and administrative doubts. A lot
the bankruptcy. In Amsterdam, the supervisory judge wants
of issues can be resolved if you analyse the situation
to check and approve each payment in advance. This calls
Office Fort Amsterdam
KAS Selections • November 2012
17
KAS BANK. You understand how an administrator operates and what he needs. There’s a continuous system of evaluation and quality assurance. We enter all our payments via KAS-Web, which is quick and easy. We have the support of a helpdesk if we experience technical problems. Sometimes, an administrator might have to make a payment to a creditor in an obscure foreign country for the first time, or a particular payment may have to be made outside the system. In those situations, help is very welcome. You always get to speak to the right person quickly, because the lines of communication are short, and I really appreciate that. for very specific support. First and foremost, an administrator must be able to pay quickly. Sometimes a lot
What do you think of KAS BANK’s payment
of small payments are involved. An instruction to make 800
system in terms of the separation of functions
payments ranging from €10 to €5,000 is not uncommon. For
and the extra validation stage before the
us, it’s important that no costs are charged for this. In small
court?
bankruptcies, or in debt restructuring measures, if costs are
When an administrator is appointed by the court, he has to
charged for this, the money intended for the creditors soon
open a bankruptcy account, in which the bankrupt funds are
gets swallowed up. Furthermore, if the balance is zero, no
administered and managed. We use the inputter/checker
costs are charged. This isn’t the case with a standard bank
model. The payment instruction is also authorised by the
account, where costs apply to each credit or debit, or to the
court in Amsterdam. Thus the court supervises payments
package.
made by the administrator. These people don’t work in the same building, so a separate structure had to be developed
Our bankruptcy practice group handles lots of bankruptcies
for this. KAS BANK came up with a bespoke system. I was
and, for many years, all the accounts have been held at
a member of the special committee that tested the beta versions and conveyed the special requests made by the court and the administrators. We found the working
Frits Kemp is a partner in the
relationship to be pleasant and informal.
Corporate Law practice group at
A bankruptcy account was recently confiscated at
Fort. Frits specialises in corporate
KAS BANK. Whether this should be permissible is a moot
law and insolvency law and advises
point. Your employee appreciated this fact, and initially
numerous large companies. He
refused to make the payment and cooperate with the
heads the growing and renowned
attachment. Interlocutory proceedings followed, which we
insolvency law practice at Fort.
won. This is an example of the good service KAS BANK
He regularly acts as an administrator in moratoria on
offers to administrators, its active involvement in coming up
payments and is often appointed administrator in major
with solutions and its expertise.
bankruptcies. As well as being highly adept at handling the legal aspects of a case, he also has a wealth of knowledge and experience of the commercial and economic issues involved.
18
KAS Selections • November 2012
The ‘Ultimate Forward’ Rate: could this be the final version? On 11 October, IPNederland organised the annual
Figure 1:
BeleggersBeraad ‘investor deliberation’ event. On the KAS BANK stand, our relationship and sales managers talked to many people interested in KAS BANK’s institutional services. Mark Schilstra, Managing Director of Client Management at KAS BANK, delivered a presentation on the impact of the introduction of the Ultimate Forward Rate (UFR). It is summarised here.
Consequences The UFR method proposed in May will have considerable
The Ministry of Social Affairs’ so-called ‘September
consequences. Firstly, it has implications for the funding
Package’ introduces the UFR as the new way of setting the
level and its volatility. As long-term commitments no longer
yield curve for determining the market value of pension
have to be valued at the market curve, but at a lower,
funds’ commitments. The introduction of the UFR will have
presumed, long-term average, funding levels will increase
the effect of artificially increasing the forward rate to an
considerably. The effect of this will be even greater for
ultimate one of 4.2%. This has direct implications for funding
pension funds with a young participant population, since the
levels, the hedge effectiveness of positions set up, the
commitments of these funds lie further in the future.
market and the generation conflict.
Because a stable long-term interest rate has been chosen, implementation of the UFR will also result in a decrease in
The Ultimate Forward Rate
the volatility of the funding level of pension funds with
Under the current Financial Assessment Framework
(predominantly) long-term commitments. Using a long-term
(Financieel Toetsingskader, FTK), nominal pension
average will also have a subduing effect, bringing the rate
commitments are valued at current market interest rates.
towards 4.2%.
Since pension commitments are generally long-term, the valuation is extremely sensitive to the long-term interest rate.
Applying the alternative discount curve will also result in a
Given the limited liquidity in the long segment of both
significantly shorter duration for the commitments. Because
government bonds and interest rate swaps, determining the
the method of setting the forward curve beyond the LLP is a
‘right’ curve for this segment of the market is no easy task.
self-fulfilling prophecy there is, in reality, no interest rate risk
In the Framework Memorandum on revising the financial
for durations of more than 20 years. Consequently, the
assessment framework for pensions (FTK) of May 2012, it
interest rate risk will be focused entirely on the LLP, and
was therefore decided to value commitments at the so-
interest rate sensitivity will actually become negative at the
called Ultimate Forward Rate.
15-year point. Due to the shorter duration and the absence of sensitivity to interest rates after the LLP, when hedging on
The first part of the UFR curve, from today until the Last
the basis of the UFR the interest hedge must be reduced for
Liquid Point (LLP, set at 20 years), was based on the swap
durations beyond the LLP. If, however, pension funds make
interest rates and matched the swap curve exactly. From the
the collective decision to reduce their interest hedge so as to
Last Liquid Point onwards, the 1-year forward rate is
get their duration match back in order, a large percentage of
extrapolated over 40 years by means of a Smith Wilson
the positions longer than 20 years will be unwound – which
algorithm, to a long-term average of 4.2%. The swap curve
will then cause a rise in the swap curve in the long segment.
is then reconstructed from this forward rate (see Figure 1).
(See Figure 2).
KAS Selections • November 2012
19
Figure 2: Base point for sensitivity of pension funds’
The introduction of the UFR places a greater strain on
commitments under swap curve (dark green) and UFR (light
solidarity than valuation at market value. The higher actuarial
green).
interest rate has a greater influence on the value of the pensions of younger people (cash flows have a longer duration), the UFR only takes effect after the LLP (cash flows up to 20 years are therefore completely unaffected), and a higher funding level could result in fewer pension cuts. The September Package The introduction of the September Package made the UFR
Under the UFR, however, the interest rate risk (S1) within the
a reality for pension funds. This UFR, however, is quite
Required Capital (VEV, Vereist Eigen Vermogen) would
different to the UFR proposed in May – which means many
actually rise. This is because S1 is defined as a relative
of the consequences discussed above no longer apply, or
interest rate shock applied to the official Term Structure of
have at least been mitigated.
Interest Rates including UFR, published by DNB. This would imply increasing the interest hedge. So pension funds must
The main difference is that market data are used to
strike a balance between basing their steering on economic
determine the UFR instead of the Smith Wilson extrapolation
risk (which is the crux of the matter), UFR funding level (the
method. This goes some way to solving the problem of the
official steering tool) and Required Capital (which constitutes
wholly ‘self-fulfilling’ approach to setting the forward curve
a parameter).
(eradicating the interest rate risk after 20 years). The basic premise is still that only market data will be used until the
The introduction of the UFR also has consequences for the
LLP is reached. For durations over 20 years, weightings are
generation conflict. The current pension system is based on
used to determine which portion will be set using market
the principle that all the participants in a pension fund pay
data and which using the UFR (4.2%). Beyond 20 years, the
the same contribution as a percentage of their pensionable
use of market data will dwindle in favour of the UFR. As
salary. This enforces solidarity between men and women,
provided for in the May package, the zero swap curve will
the highly-educated and the low-skilled, and young and old.
then be distilled based on this forward rate. The September method also has implications (albeit to a much lesser extent) for the funding level and its volatility. Because of the partial use of market data, although the funding level will increase and the volatility will decline, that increase and decline will be substantially less pronounced than under the method proposed in May. As regards hedge effectiveness, the use of the alternative discount curve results in a shorter duration for the commitments. However the effect is considerably more limited than in the May proposal because, for durations
Mark Schilstra, Managing Director Client Management
shortly after the LLP, substantial use of market data is still
KAS BANK at IPNederland BeleggersBeraad
made. Consequently, durations over 20 years will still be
20
KAS Selections • November 2012
New Clients sensitive to interest rates, albeit to a dwindling extent. The
Netherlands
(partial) use of market data prevents the interest rate risk
Stichtingpensioenfonds Urenco Nederland
being concentrated on the 20-year segment, and eliminates
Currency Overlay
the negative interest rate sensitivity of the 15-year segment. See Figure 3 for an illustration.
Germany SJS Markets Limited
Figure 3: Base point for sensitivity of pension funds’
Settlement and Custody Services
commitments under swap curve (red) and UFR (blue).
United Kingdom Simply Stockbroking Clearing, Settlement and Custody Services Valbury Capital Settlement, Custody and Securities Lending
The September UFR places less of a strain on solidarity, since the increase in funding levels is less pronounced than under the May version. Generally speaking, the UFR places a greater strain on solidarity between generations than the
Personnel notes
use of the swap curve. Sales & Business Development Conclusion The introduction of the UFR will entail rising complexity for
1 October Werner Schreiter, Product Sales Order Execution
pension funds. They must strike a balance between basing their steering on economic risk (the crux of the matter), UFR
Client Management
funding level (the official steering tool) and Required Capital
1 September Roy Braem,
(which constitutes a parameter). What’s more, until the end of 2012 they will still have to contend with the 3-month averaging of market interest rates. When a new Financial Assessment Framework is introduced in 2014, they may also be faced with the 12-month averaging of the funding
Account Manager Institutional Services 1 October Sandra Büttner and Leif Srocka, Relationship Managers Germany 1 October Kevin Bromet, Relationship Manager UK
level. Many of KAS BANK’s clients have been prompted by these developments to ask for the swap rate to be included in their reports, as well as the UFR interest rate that must be used for DNB purposes. This reflects the economic risk actually incurred. Your account manager will be happy to assist you with providing the right steering information for your particular situation – ensuring that you remain in control, even in this challenging environment.
KAS Selections • November 2012
21
Risk management conference On 1 October, KAS BANK organised a conference in
forward: independently or by seeking to join ranks or
partnership with APG, the FNV Bondgenoten trade union
cooperate with another company or party. Oerlemans
and Ortec Finance on pension fund risk management. The
argued the need for a public debate which focuses more on
conference was prompted by the publication of the
the long-term outlook for our pensions rather than on the
Investment Risk Guide, an initiative of FNV Bondgenoten.
current funding level. He feels this is the only way to retain
The Guide offers guidance to trustees on how to use risk
public support for pension provision. We must also focus
management instruments for their investments and
less on the asset allocation and far more on specific risks,
investment processes. With Sikko van Katwijk, Board
such as interest rate and country risk.
Member KAS BANK in the chair, five speakers explored a number of aspects of the ‘sources of risk’ method
Oerlemans, himself a trustee, concluded his talk with the
described in the Guide.
optimistic message that managing might appear to have become a more complex task but, in essence, it still boils
Alwin Oerlemans, Director of Institutional Business
down to the same thing: making good use of the available
Development at APG, talked about the instruments of good
steering instruments and deploying the best possible management skills. José Suarez Menendez, a Pensions Advisor at FNV Bondgenoten, then explained the steps detailed in the Risk/
governance in relation to the increased focus on risks and risk management. Trustees must ensure that the fund is organised along lines allowing effective risk management. They have a number of steering instruments with which to do this at their disposal: the investment, contribution and
Return Profile chapter. The basic principle is allocation by
indexation policy and, in the current market, the question of
sources of risk rather than asset classes. Various aspects,
whether or not cuts to pensions have to be made. To ensure
including the parameters for a fund’s risk appetite and risk
efficient management, their agenda must be determined by
capacity, must be determined prior to the ALM. Menendez
these steering instruments (and organisational issues),
emphasised that the management must also consider
rather than a plethora of operational issues. It is vital to
whether the pension mandate formulated by the fund is
communicate with participants in order to get them on-side
realistic. Is the risk commensurate with the pension promise
with the risk policy.
to the participants? Once the risk appetite and risk budget have been
Pension funds take considered risks to increase their returns
determined, these assumptions can be incorporated in the
– but participants are not keen on uncertainty. To create
ALM. Although the risk budget is apportioned by sources of
certainty and to keep their pension promise, pension funds
risk rather than assets in the ALM, this requires the input of
will therefore have to reflect on how they wish to move
the Board of Trustees. The fund then names the sources of
22
KAS Selections • November 2012
risk, based on clear criteria. Properly substantiated
as the basis for the ALM. The purpose of holistic risk
expectations with regard to the return, mobility and
management is to manage financial risks in a consistent way
diversification effects of the sources of risk must also be
and to improve the quality of management. The risks in
stated, followed by choices as to which risks are acceptable
question are strategic ones and the risks in the performance
and which are not, and for what purpose. All of this forms
of the investment policy. For a young pension fund, those
the input for the ALM and the basis for the mandate to the
risks may differ from the risks run by an old fund.
asset manager. Good management information is then
Risk management can be improved by setting clear
needed so as to revise the assumptions where necessary.
guidelines for the risk budget and risk mix during the ALM
Ideally, monitoring and reporting will be handled by a third
phase. Some of the advantages of the sources of risk
party rather than the asset manager itself, so that it is always
method are: the management has a greater understanding
possible to ‘go back to the source’ when deciding on the
of the risks, complex products can be analysed to identify
choice of particular risks and sources of risk and to answer
the basic elements, and the method enables consistent
the question: why I am willing to take this risk?
implementation and awarding of mandates as well as consistent monitoring throughout each phase of the
Next, Loranne van Lieshout, Senior Consultant Pension Risk
process. However, the risk mix is an addition to, rather than
Management at Ortec Finance, discussed sources of risk
a replacement for, the asset mix. Additional, unquantifiable risks must still be monitored – a process that relies on proper consultation between the people involved in the ALM, the asset manager and the custodian, while the concept is being developed. During the implementation phase, the agreed strategy must be properly executed. Van Lieshout demonstrated how a risk mix is preferable to an asset mix when determining the investment mix. This is because the risk mix illustrates which source is responsible
KAS Selections • November 2012
23
for which part of, for instance, the funding level risk,
this need not always be regarded immediately as an explicit
affording a better understanding of the risks than the asset
breach.
mix. It is also important to use the risk measure (volatility, VaR, Expected Shortfall) consistently throughout the ALM
The focus of the ALM is on market risks, in terms of both
process.
mismatch and investments. The same applies to the
At present, choices are often made during the investment
resulting mandates. Mandates must be clear about ‘known
portfolio construction phase which alter the risk profile or
unknowns’ and how to handle them, which is why
alter the spread across sources of risk. Because of this, the
parameters must be defined in the mandate. A list of
asset mix must be checked constantly against the risk
permitted instruments, for example, is a generic and
budget and the risk mix. Finally, all the parameters must be
effective parameter. Additional, restrictive conditions are also
recorded in the mandate and actively monitored.
necessary to rule out exposure via another route, such as securities lending or reinvesting collateral. A maximum
Pieter van Foreest, Head of Client Risk Management at APG
portfolio leverage can also be stipulated. The counterparty
Investment Services, then described the parameters for
risk and bankruptcy risk can be limited by restricting the share of particular counterparties, sectors or countries to a certain percentage of the total exposure. Finally, valuation models must be used to identify the link between how the sources of risk are translated and the changes in value in the balance sheet headings. These models thus play a crucial role in every phase of the investment process, from ALM to implementation and reporting. To ensure consistency across the different phases of the investment process, the valuation details must be
formulating mandates for sources of risk. The key
explicitly recorded in a valuation manual.
requirement when formulating mandates is that the risk policy and risk management must be included in the fund’s
In his talk on reporting and monitoring, Ard de Wit, Head of
mission. After all, the mission is the point of departure for the
Institutional Risk Management at KAS BANK, explored three
mandate to be drawn up and the benchmarks for sources of risk, target returns for sources of risk, risk budgets and ranges and, finally, the parameters. However, it is virtually impossible to take account of all the risks in the risk budget. In the sources of risk model, the risk budget is determined by setting targets for key risk measures (absolute and relative). To prevent short-term overreactions, ranges can be used (soft and hard limits) along with the related escalation and other guidelines. The limit structure has been designed to enhance the transparency and awareness of sources of
key components: performance, risk measurement and
risks. Limits are set on both sides of the target and (because
compliance. When reporting on a fund’s performance, it is
they serve as warning signals) must be breached with a
important above all to compare the risks realised and results
pre-defined likelihood. In this way, when limits are exceeded,
achieved with a clear and carefully chosen benchmark. This
24
KAS Selections • November 2012
is because the results of the measurement depend heavily
A participant then expressed his concerns about the
on the benchmark chosen. Consistency between the ALM,
younger generation if the interest rate – an important
implementation and monitoring is also crucial. Compliance
parameter of the source of risk model – continues to fall.
processes must be geared heavily towards monitoring the
Suarez Menendez shared his concern. He pointed out that a
mandate in respect to risk realised versus mandated risk.
Board of Trustees must constantly ask itself whether the
Back testing is another important component of the
fund’s target return is still realistic, in the current
monitoring process. After all, using a particular model
circumstances. If it is not, the board can decide to return its
without regularly reviewing the assumptions is in itself a form
mandate to the fund’s partners.
of risk. De Wit concluded with five key points. A pension fund must
The model presented comprises two dominant sources of
keep a careful eye on its pooled investments and illiquid
risk: the interest rate and marketable securities. That’s
positions. Furthermore, as well as making a considered
nothing new in itself, one member of the audience argued.
choice in favour of a particular risk measure and risk model,
He wondered whether the value of the model lies primarily in
it must use assumptions and models in a consistent way, to
the preliminary discussions about the assumptions made
ensure meticulous reporting and monitoring.
when setting the risk budget. Van Lieshout agreed, so she advised always using different methods for examining the
The concluding panel discussion was chaired by
assumptions. Oerlemans also reiterated that the added
Kris Wulteputte, Chief Risk Officer at KAS BANK. One of the
value of the model lies chiefly in the fact that it elucidates the choices in favour of particular sources of risk. New sources of risk may arise over time as a result of the diversification of the investment portfolio, and the board must constantly be mindful of this. The final question was related to this. Risks themselves vary over time. How does the model handle this and how does the regulator, DNB, judge this? Suarez Menendez explained that DNB always ‘judges’ the pension fund’s board of
questions was whether maintaining a certain amount of
trustees by the result actually achieved. Therefore, trustees
accounting leeway is also a source of risk. Oerlemans felt
must always be able to explain to all stakeholders ‘in
that was indeed an important point, which touches upon the
retrospect’ how and why certain risks were taken to achieve
issue of distribution between young and old. The fund must
the fund’s objective. This ‘coupling piece’ between
always be guided by its mission. After all, the regulator has a
determining the risks to be taken in advance and
different perspective on the fund’s capital than the fund
subsequently being able to explain why this was done was
itself. Furthermore, opting for a certain amount of accounting
previously lacking. The source of risk model helps raise
leeway affects how supportive participants are with regard to
awareness of the risks.
the risks taken. De Wit concurred with this. As a trustee of KAS BANK’s pension fund, he prefers to be guided by economic principles rather than regulations – which can, after all, change often. Van Foreest commented that the ‘regulation risk’ ought to be a matter for public debate.
KAS Selections • November 2012
25
Global Custody Network News Europe
Outside Europe
Germany – Eurex Clearing plans new clearing system for
Brazil – Tax exemption for certain instruments
derivatives Eurex Clearing is planning to launch a new clearing system for derivatives clearing in Q4 2013. The ‘new clearing architecture’ will ensure more flexibility for the introduction of new product types, asset classes and services. Hungary – Financial Transaction Tax applicable to
securities and derivatives transactions The Hungarian Government has published a proposal to modify the law on the Financial Transaction Tax (FTT) that was approved in July 2012. The government extends the
The Brazilian Government has amended the tax benefit
FTT to securities and derivatives transactions as of
characteristics for certain instruments. Foreign investors not
1 January 2014. The FTT will not apply to foreign banks and
domiciled in tax haven countries, investing in CRI (mortgage-
other financial institutions during 2013. It will be paid by
backed securities), infrastructure debentures and investment
banks based on the clients’ transactions. The proposal is
funds of such instruments will be subject to 0% withholding
currently under analysis by all market participants and its
tax if the instruments meet the necessary characteristics as
content may still be changed during Parliament’s discussion
described in Law 12,431.
and approval process.
Law 12,431 also determines that the issuer of the CRI and debenture is subject to a penalty of 20% of the amount
Austria – Go-live of the CCP.CEE cash market clearing
raised if the issuer does not comply with the Law.
system is postponed
Clients are advised to consult their brokers and investment managers in the local market to determine whether a debenture complies with Law 12,431 requirements and whether they can therefore benefit from the tax exemptions described above. Nigeria – NSE introduces market makers
The Nigerian Stock Exchange (NSE) has begun a Market Making Program in the Nigerian Stock Market. Initially the CCP.A (the Central Counterparty Austria) has postponed
market making has been introduced for 25 blue-chip shares
implementation of the new CCP.CEE cash market clearing
selected from the banking and consumer goods
system until 2013. The OeKB (CDS) will announce the new
sectors. Price swings for the selected shares are also
go-live date by the end of 2012. Because of the postponed
relaxed to allow movements up to 10% a day, from the
implementation, the new amendments and fees to the
current 5%.
CCP.A clearing rules will come into force later.
26
KAS Selections • November 2012
Improving returns in securities lending Borrowing and lending securities improves the liquidity of
participating parties. Sadly, the global financial crisis has
the financial markets and is essential for these markets to
done enormous damage to confidence in the financial
function more efficiently. Securities lending has great
markets, resulting in a dwindling securities lending market.
benefits for both institutional investors and broker-dealers.
The parties involved have been quick to accept and implement risk-mitigating changes, agreements and stricter
Institutional investors generally appoint their global custodian
controls. As a result of more stringent legislation and
as their securities lending agent. In this role, the custodian
regulations, such as Basel III, Dodd-Frank and the regulation
not only eases their administrative workload but also
of short-selling in the European Union, the market has
provides institutional investors with access to the market of
ultimately emerged from this test of confidence stronger,
potential borrowers, such as market counterparties and
safer and more transparent.
broker-dealers. This is a way for institutional investors to make more profit from their ‘dormant’ securities portfolio.
The result is growing demand for equities and bonds around
However, securities lending is also important for broker-
the world, which is translating into higher turnover on the
dealers, particularly borrowing securities so as to avoid
securities lending market. For you, this means that the risk/
non-settlements. KAS BANK is a longstanding provider of
return balance of your investment portfolio can once again
securities lending services to its professional clients (both
be carefully assessed. Our specialised Securities Lending
end investors and intermediaries). What sets us apart from
traders can estimate for you what return you could generate
other providers of these services is our pure play model and
on your portfolio through securities lending. Contact your
our Principal Agent programme, whereby KAS BANK
relationship manager for more information.
assumes the counterparty risk. The Securities Lending market has traditionally been founded on a great deal of mutual trust between the
KAS Selections • November 2012
27
EU Short Selling Regulation The EU Short Selling Regulation has come into effect in
An exemption to this regulation is provided for the activities
the European Union as of 1 November 2012. According to
of market makers, since market makers often need to take
the European Securities and Markets Authority ‘the
short positions to perform their crucial role of providing
objectives of this short selling legislative framework are to
liquidity. As a prerequisite, the activity must be notified to the
increase transparency of short positions held by investors
competent authority and the respective transaction must be
in certain EU securities, reduce settlement and other risks
rendered as part of a market maker activity. This exemption
linked with uncovered or naked short selling, and create a
may be extended to primary dealers in the future.
harmonised framework for coordinated action at the European level.’ In this article we will discuss what the EU
Funds (or portfolios under management) managed by the
Short Selling Regulation comprises, what the disclosure
same management entity are not expected to report net
requirements are and what the buy-in regulations will be.
short positions, as at individual fund level only the calculation of the net short position for each particular issuer is required
Regulatory framework
to take place.
The EU Short Selling Regulation has been introduced as a European regulation and therefore has immediate effect. The
What is a ‘short sale’?
regulation is directly applicable in all member states and
A short sale is defined as any sale of a share or debt
does not have to be implemented in national legislation.
instrument which the seller does not own at the time of
The regulation lays down a common regulatory framework
entering into the agreement to sell, including where the seller
and ensures greater coordination and consistency between
has borrowed or agreed to borrow the share or debt
member states in case actions have to be taken in
instrument for delivery at settlement. A short sale is only
exceptional situations. The rules will lead to a higher degree
allowed if at the time of the short sale the transaction is
of transparency due to the reporting obligation, will increase
capable of being settled when due.
the role of the European Securities and Markets Authority (ESMA) and will impose a virtual ban on certain Credit
Scope of the EU Short Selling Regulation
Default Swap transactions.
The financial instruments concerned by the net short position notification and disclosure requirements are:
The regulation consists of the following items: 1. Requirement for firms to disclose net short positions in EU-listed shares and EU sovereign debt. 2. Restriction on uncovered short selling of EU-listed shares and EU sovereign debt. 3. Prohibition of uncovered credit default swaps (‘CDS’) in
1. Shares admitted to trading on a European regulated market or a multilateral trading facility (MTF). Shares that are traded principally on a trading venue outside the EU but are also traded in the EU are exempt. The predominant trading venue is decided by the largest volume in the previous 24 months.
EU sovereign debt, which does not serve to hedge
2. Sovereign debt issued by a sovereign issuer.
against exposure to the underlying sovereign debt.
3. CDS on sovereign debt of a sovereign issuer.
4. Requirement for central counterparties that provide clearing services for shares, to ensure that there are
With respect to shares, the regulation requires that a list of
adequate arrangements for buy-in of securities when
exempted shares is published by ESMA on its website on
there is a failure to settle a transaction within four
the basis of the information provided by national competent
business days after the day on which settlement is due.
authorities. ESMA will update this list every two years, but
5. Creation of additional measures that can be taken by national regulators and the ESMA.
28
KAS Selections • November 2012
the list will also be updated by national competent authorities. If a share is not mentioned on that list and is
admitted for trading on a regulated market in the European
the buy-in of shares where there is a failure to settle a
Union or is traded on an MTF in the European Union, it is
transaction within four business days after the day on which
subject to the requirements of the EU Short Selling
settlement is due. Where buy-in is not possible, the short
Regulation. ESMA has published a list of shares admitted to
seller must pay to the purchaser an amount based on the
trading on a regulated market in the European Union
value of the shares to be delivered at the delivery date, plus
(http://mifiddatabase.esma.europa.eu/) which identifies the
an amount for losses incurred by the buyer as a result of the
relevant competent authority for each share for the purpose
settlement failure. The requirements relating to the buy-in
of the regulation.
procedures apply only in relation to the short sale fo shares but not to the short sale of sovereign debt instruments.
Disclosure requirements
The regulation also provides that central counterparties that
The regulation also requires firms to disclose net short
provide clearing services for shares will be required to
positions in EU listed shares as follows:
impose daily fines in cases of non-settlement. The daily fines
• A net short position of 0.2% or more of the issued share
shall be sufficiently high to act as a deterrent to natural or
capital of a company whose shares are admitted to
legal persons failing to settle.
trading on a regulated market. Any 0.1% increment over 0.2% in the net short position must also be disclosed to
Conclusion
the relevant competent authority (i.e. 0.3%, 0.4% and
Market participants will need to reassess their investment
0.5%).
strategies utilising short sales of EU listed shares and EU
• A net short position of 0.5% of the issued share capital of a company whose shares are admitted to trading on a
sovereign debt. For the most part, the EU Short Selling Regulation is not retroactive.
regulated market or MTF must be reported publically to the market. Any 0.1% increment over 0.5% in the net
Market participants will need to ensure that systems are in
short position must also be reported to the market. All
place which will calculate net short positions in EU shares
disclosures must include the identity of the person
and EU sovereign debt at midnight of the trading day and
holding the short position.
make reports to the relevant regulators no later than 15:30 of the following trading day.
Timing of disclosure of a net short position Calculations of a net short position must be made by
To prevent any net short positions, market participants can
midnight at the end of the trading day. The notification or
utilise the borrowing possibilities that are facilitated through
disclosure shall be made not later than 15:30 on the
the KAS BANK lending desk.
following trading day. All times are calculated according to the time in the EU Member State of the relevant competent authority to whom the relevant position must be notified. The regulation sets out the format of the information to be provided in the notifications to the regulators and public disclosures. This means that all EU Member States have a harmonised form of disclosure. Buy-in procedures and fines for late settlement Central counterparties providing clearing services for shares must ensure that there are automatic procedures in place for
KAS Selections • November 2012
29
German Depotbank well-prepared for future challenges
Words from Wiesbaden The challenges Depotbanks face have rarely been
Let’s talk about the German market. What are
greater than nowadays. The wave of regulations puts the
the recent topics with which you have been
industry under enormous pressure. But at the same time
dealing?
these challenges represent a great opportunity for all
Schuhbeck: In 2010 the German Federal Financial
market participants. Günter Schuhbeck, Branch Manager
Supervisory Authority (BaFin) announced new regulations
KAS BANK N.V. German Branch and Anja Maiberger,
with its circular ‘Depotbankrundschreiben’. As one of the
Head of Sales, Institutional Custody and Depotbank
first market participants KAS BANK was able to meet the
Services, illustrate the characteristics of the German
requirements of these regulations completely.
market and what the key will be for future success.
According to BaFin statistics the German Depotbank market urrently consists of 50 potential competitors.
The Depotbank is a registered credit institute
A consolidation of these Depotbanks has been forecast by
and has two different functions in the German
experts for some years, but has still not begun. It is
fund market. Could you please explain these
questionable whether this consolidation will happen at all.
briefly?
Thus a new service sector has been created due to the
Schuhbeck: All activities and tasks of a German Depotbank
shifting of services and the tendency of outsourcing
can be summarised into two main categories. Firstly, the
services.
custodian activities which comprise for example the execution of payments and the delivery of securities, tax
Maiberger: Regarding EU regulations, AIFMD is one of the
reclaims and proxy voting. And secondly, the activities
hot topics and has the potential to become a lucrative new
required by the German Investment Act (Investmentgesetz).
business segment for KAS BANK in Germany. For closed
These functions might include the subscription and
end funds for example, we can offer services similar to our
redemption of shares (of the fund), authorisation of
control functions in our current Depotbank. In comparison to
transactions (for example obtaining loans, etc.) and above
the UK and the Netherlands, we envisage a lesser impact of
all control functions (e.g. post-trade compliance checks,
the AIFMD from an operational perspective; in many ways
check on security holdings and account balances, valuation
the new regulation is close to the set-up already in place in
and calculation of the NAV, attention for shareholders’
Germany.
interests). Why is the control function of a German Depotbank so unique? Schuhbeck: Because it is a German speciality and of the utmost importance; no other leading fund market has comparable control demands. All are based on the principle of investor protection. To set up a fund in Germany, not only an asset manager is required but also a KAG and a Depotbank. Each entity is regulated to ensure that each party is carrying out its duties correctly and the investor’s assets must remain separate, similar to a trust set-up.
30
KAS Selections • November 2012
and standardising our processes, our service range, our Branch Manager Günter
service quality and our external reporting to boost our
Schuhbeck joined the KAS BANK
custody and Depotbank business.
German Branch bringing with him thirty years’ experience from
In your opinion, who will be successful in the
CACEIS Bank Germany and its
German Depotbank market in the next few
predecessors HypoVereinsbank AG
years?
and Byerische Vereinsbank AG. In
Maiberger: Those Depotbanks will prevail which are able to
his previous position at CACEIS Bank, Schuhbeck was
adapt to a continuously changing regulatory environment,
responsible for Sales & Relationship Management for
and which at the same time anticipate their clients’ needs
Depotbank clients. Before that he was responsible for
and deliver tailor-made services and sophisticated reporting
Depotbank Services at HypoVereinsbank.
e.g. Performance and Risk Reporting to support them. Schuhbeck: We believe, and that’s what we are focusing on,
The Depotbank in Wiesbaden is a young
that Depotbanks which offer very individual and flexible
representative within the industry. Can you
services of a high quality will be in a winning position. The
please give us a brief overview of your
willingness for new products and to strike new paths will
business and what is your main focus at the
differentiate the market participants from each other. In the
moment?
long term a market-adjusted service portfolio will be decisive
Schuhbeck: We set up our German Depotbank business in
and not the price.
June 2010 and our team currently consists of six employees. Anja joined KAS BANK in the summer as a highly experienced sales manager for institutional custody and
Anja Maiberger joined the
Depotbank services. We work on the same IT platforms as
KAS BANK Wiesbaden team on
our colleagues in Amsterdam (Mainframe, SimCorp, etc.). As
1 August 2012 as Head of Sales,
I mentioned previously, we have met the requirements of the
Institutional Custody and
Depotbankrundschreiben right from the start. So we have
Depotbank Services. Prior to
been able to focus on establishing a high standard regarding
KAS BANK she worked for several
our technical infrastructure as well for our knowledgeable
years for the Bank of New York
staff. Both the BaFin and our external auditor confirmed our
Mellon in Frankfurt. In her previous position as Director
excellent set-up.
Business Development at BoNY she was responsible for the Nordics and later for the German market with a
Maiberger: Obviously we are a relatively small Depotbank in
focus on financial institutions, insurance companies and
comparison to our competitors. But our aim is not to
banks. Maiberger previously worked as Senior
become a price leader in the German market. Our focus is to
Relationship Manager for Transaction Banking–Custody
position ourselves as a recognised specialised niche player.
Solutions and Depotbank at Dresdner Bank.
Our flexibility is currently our main asset. And as a proven modern Depotbank we feel fit for future challenges. At the same time we work continuously on improving, optimising
KAS Selections • November 2012
31
NETHERLANDS
NETHERLANDS
UNITED KINGDOM
KAS BANK AMSTERDAM P.O. Box 24001 1000 DB Amsterdam The Netherlands Spuistraat 172 1012 VT Amsterdam The Netherlands T: +31 20 557 59 11
GERMANY
KAS BANK LONDON 5th Floor 10 Old Broad Street London EC2N 1AA United Kingdom T: +44 20 7153 36 00
KAS BANK WIESBADEN Biebricher Allee 2 65187 Wiesbaden Germany T: +49 611 1865 3800
www.kasbank.com