Icelandic pension funds shift sharply into direct mortgage investment

first_imgIceland’s pension funds have expanded their investment in domestic mortgage debt sharply since the beginning of this year, as the state mortgage provider retreats from the sector.Multi-employer pension fund Frjalsi, for example, has increased its mortgage debt investment to around 5% of its €1.4bn in total assets in September, from 2% in the first two months of this year.Pension funds have traditionally offered top-up mortgages to their members but say they are now increasing this business mainly as a result of demand for mortgages increasing in the country.The pension funds said the Housing Financing Fund (HFF), an independent government institution that has traditionally been the main provider of mortgage loans in Iceland, has been reducing its mortgage lending in recent years. Marinó Örn Tryggvason, CIO at Frjalsi Pension Fund, told IPE: “Pension funds have been gaining market share both at the cost of the banks and the government’s HFF.”Late last year and early this year, he said, some of the pension funds changed their mortgage pricing strategies because they wanted to try out this market.He said the HFF’s shrinking share of the mortgage market may be because it had priced itself out of the market.But some see this retreat as a political move to reduce government-backed financing in the Icelandic economy, which could fall foul of EU rules on state aid.Iceland belongs to the European Free Trade Association (EFTA), but its position regarding accession to the EU is contentious, with the country having applied for membership in 2009, and put negotiations on hold in 2013.A general election is expected to take place on 29 October following anti-government protests earlier this year after the then prime minister Sigmundur Davíð Gunnlaugsson was caught up in the Panama Papers scandal.Kristjana Sigurðardóttir, CIO at Almenni Pension Fund, told IPE: “Mortgages for pension members has been increasing in the past few years, and this year, it has more than doubled at Almenni.”Traditionally, individuals in Iceland have been granted the vast majority of their mortgage loans by the HFF and have only topped this up by a small proportion from their pension funds, if at all, she said.“But now the pension funds have been stepping deeper into that market,” she said.“The banks are unhappy pension funds have been making such big inroads into the mortgage market and have taken this issue up with the regulator.”She said the regulator would be unlikely to restrict pension funds in this market, as that would reduce consumer choice.The HFF’s mortgage lending activity has decreased in tandem with its bond issuance.Pension funds have been one of the main buyers of HFF bonds, so the disappearance of these instruments has been part of reason the savings institutions have been seeking other forms of fixed income investment.Tryggvason said HFF bonds had previously made up the lion’s share of pension funds’ fixed income investments.He predicted the general shift of mortgage lending to pension funds would probably continue.“For Frjalsi, our exposure is very likely to go up to more than 10% next year,” he said.As investments, direct mortgage lending generates higher returns than Icelandic government bonds, being priced at approximately 1 percentage point above yields on government notes.But it is also considered a safe investment, since the average loan-to-value allowed on the home loans is between 50% and 65%, Tryggvason says.last_img read more

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I want to coach Brazil – Roberto Carlos

first_imgFormer Brazil star Roberto Carlos has set his sights on coaching the national team once he has established himself as a manager.According to Goal, the 42-year-old represented his country between 1992 and 2006, winning one World Cup and two Copa Americas.Following his retirement from playing in 2012, he has held roles at Turkish clubs Sivasspor and Akhisar Belediyespor but has set himself lofty ambitions for the future.“My objective is to coach the national team,” he told Folha de Sao Paulo.“I know I have a long way to go yet and for that reason I won’t put a timeframe on how long it will take.”Roberto Carlos was blamed for his side’s exit from the 2006 World Cup but insists he would have no problem returning to the Selecao fold. “I don’t hold any resentment. Everything I experienced in the national team was amazing. I was there for 14 years and won several titles: the Copa America, Confederations Cup and the World Cup.“I have a lot of affection for the team and I’m enthusiastic to return.”The former Inter and Real Madrid man also claimed that he had been preparing for a career on the bench when he was a player and has found coaching simple.“It’s very easy. I was well prepared by playing football and living under pressure. I spent my career at big clubs.“I’ve learned something from all the coaches I’ve worked with (Mario) Zagallo, (Carlos Alberto) Parreira, (Vicente) Del Bosque, (Fabio) Capello, (Luiz Felipe) Scolari and Roy Hodgson.”last_img read more

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