Bank of Ireland's beleaguered asset management business received a boost yesterday when it was retained by the National Pension Reserve Fund (NPRF) to help manage about €3 billion worth of assets.
Bank of Ireland Asset Management (BIAM) won the fund's tender competition to manage equities on a passive basis with State Street Global Advisors.
Barclays Global Investors will manage a further €3 billion of funds.
The fresh mandate ends a seven-month wait for Bank of Ireland to find out if it would be kept on as passive manager and injects a much-needed boost to the business.
BIAM was dropped by the NPRF as manager of a €400 million active fund and has lost a significant number of pension fund mandates worldwide.
Assets under management at BIAM slid from €57 billion to €42 billion over two years, with Bank of Ireland announcing last month that it would merge the troubled business with its wholesale financial services division in a move viewed by analysts as a downgrading unit.
In the 12 months to the end of last March, BIAM posted a pretax profit of €85 million, down from €125 million a year earlier. It also suffered the defection in 2004 of four senior executives to Australian group Perpetual. However, BIAM looked like it was turning a corner earlier this year when new business increased funds under management by €300 million.
The pensions reserve fund, designed to pay for part of social welfare and public service pensions in the decades ahead, will allow BIAM and the other asset managers increased flexibility under the retendered mandates as the fund seeks to generate increased returns. Under the existing mandate, the managers can only use certain benchmark indices whereas the new mandate will broaden the investment criteria.
In a separate statement, Bank of Ireland said its private banking arm would make its first significant investment in the Asian property market.
Bank of Ireland Private Banking will invest about €50 million in the development of Seoul's International Finance Centre (IFC) in an effort to create higher returns for its clients.
The IFC Seoul will be a €1.6 billion commercial development comprising offices, retail outlets, entertainment facilities and a five-star hotel, based in the financial district of Yeouido. It is being developed by AIG Global Real Estate, part of the investment management unit of American International Group.
Bank of Ireland said the main reason it was investing in the project was because of AIG Global Real Estate's record in developing and managing Asian property and AIG is a significant investor in the IFC Seoul.
"We believe this region will be a key engine for future global growth and long-term investors should be considering increasing their weighting to the region," said Peter Collins, property director at Bank of Ireland Private Banking.
The Irish lender also appointed three new executive directors yesterday and named Denis Holt, former chief executive of AXA UK, to its court of directors. The new executive directors are Richie Boucher, chief executive of retail financial services Ireland; Des Crowley, who heads up UK financial services, and Denis Donovan, who was recently named chief executive of the lender's capital markets division.
