Bank of Ireland Asset Management's contract to manage a €400 million slice of the National Pension Reserve Fund (NPRF) has been placed under review.
The review to determine whether to relieve the fund manager of its responsibilities is the latest blow for the Bank of Ireland subsidiary, which has lost several fund management contracts following the departure of key staff late last year. The NPRF mandate would be the first Irish mandate lost by the group.
Bank of Ireland Asset Management (BIAM) was engaged by the pension reserve fund to actively manage what is now a €400 million portfolio of pan-European large capitalisation equities.
However, it is understood that this portion of the fund has underperformed in 2004. This was exacerbated by the decision of four key executives to leave BIAM last September to set up a new global equities business for Australian asset manager Perpetual.
A spokesman for the NPRF said he could neither confirm nor deny whether a particular fund manager was under review.
"It is not our policy to comment on the performance of specific fund managers," he said.
However, sources confirmed that the bank's mandate was under review. The review means that NPRF executives will examine every action taken by BIAM in its management of the fund. This can continue for several months.
The fund spokesman said that any decision to review a manager would not be taken lightly. In the event of a review taking place, the NPRF would not prolong the exercise. "We don't keep managers under permanent review," he said.
The NPRF is understood to be keen to give BIAM's recently appointed chief executive Mr Kevin Dolan and the team he is hiring to replace the head-hunted executives a chance to show that they can deliver.
BIAM has been haemorrhaging investment mandates in the last 12 months. Bank chief executive Mr Brian Goggin, who previously ran the asset management business conceded that it lost around €5.7 billion of business in the six months to the end of September last.
Since then, BIAM has lost further mandates - particularly in North America and Australia. Earlier this week, the Australian Furniture Industry Retirement Super Trust dropped BIAM as manager of a 20 million Australian dollar international equities mandate. In Britain, Lothian Pension Scheme has said it is set to tender for global and non-UK European Equity mandates that are currently held by BIAM and worth €256 million. It also manages €110 million in global equities for Lothian Council which has said it plans to advertise for a manager shortly.
BIAM's losses are now understood to be between €6 and €8 billion - a significant portion of the €50 billion it manages. The National Pension Reserve Fund currently manages an €11.7 billion fund designed to help meet the cost of State pensions after 2025. The Government invests a sum equal to 1 per cent of gross national product (GNP) in the fund every year.
A spokesman for Bank of Ireland Asset Management last night said it had no comment on the review.
