Briefly: “Panel Calls for End to Bank Merger Ban” and More of Thursday’s News
June 26, 2008 |
Staff
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The panel reviewing Canada’s competition and investment policies delivered its report to the federal government Thursday, with a number of recommendations including the suggestion to allow bank, insurance and cross-pillar mergers.
The Competition Policy Review Panel’s report says a lot has changed since 1998 when a de facto prohibition on mergers between large financial institutions was announced by the then Minister of Finance, Paul Martin.
“Financial institutions the world over have merged, creating larger, more powerful competitors. Yet the de facto ban on mergers between large Canadian financial institutions has been in place for a decade,” says the report. “The Minister of Finance should remove the de facto prohibition on bank, insurance and cross-pillar mergers of large financial institutions subject to regulatory safeguards, enforced and administered by the Office of the Superintendent of Financial Institutions and the Competition Bureau.”
Additionally, the report called for the liberalization of “investment restrictions in the Canadian air transport, uranium mining, and telecommunications and broadcasting sectors.”
Read the report.
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CPPIB Shops in Toronto, Calgary
By July 1, the Canada Pension Plan Investment Board (CPPIB) will hold a 50% non-managing interest in developments in two shopping centres in Toronto and Calgary.
The total development cost of the two projects is expected to aggregate approximately $440 million. Under the agreement, RioCan Real Estate Investment Trust and Trinity Development Group will each retain a 25% ownership interest in the two developments. The transaction is expected to close by June 30, 2008.
“This investment represents a further expansion of our real estate portfolio with the addition of major high quality assets, and builds on our relationship with RioCan and Trinity, one of Canada’s best and largest retail operator and development teams,” says Graeme Eadie, senior vice-president, real estate investments for CPPIB.
RioCan and Trinity currently own 60% and 40%, respectively, in each of the properties. Both organizations will reduce their interests to 25%.
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Institutions Still Committed to Hedge Funds
Despite the downturn in performance last year, institutional investors are not shifting away from hedge fund investments.
According to a 2008 study by Greenwich Associates and Global Custodian, pension funds, endowments and foundations remain strongly committed to the asset class.
Institutions’ commitment to hedge funds is due in large part to the key role that hedge funds have taken on in new portfolio management models. These models were designed to expand the principals of modern portfolio theory to encompass “non-traditional” assets. The approach is characterized most obviously by its heavy use of hedge funds, private equity funds, and, increasingly, other alternative asset classes viewed as having a low level of correlation with traditional fixed-income and equity holdings.
In the United States nearly 45% of institutions invest in hedge funds and U.S. institutions’ investments in hedge funds totaled approximately US$195 billion in 2007, up from $140 billion in 2006 and $113 billion in 2005.
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Standard Life Introduces New Web Tools
Standard Life has introduced a new website that the company says “will change the way plan sponsors do business.”
"We have leveraged Standard Life's expertise in group savings and retirement that we have developed over the years and used the latest technology to meet needs that our clients and benefit consultants have expressed,” says Anthony Cardone, senior vice-president, group savings and retirement with Standard Life. “We have not simply updated the existing site; we have created a whole new way for members to manage their retirement assets. And this is only the beginning.”
The interactive area for sponsors of the company’s site, called the VIP Room, is designed to save sponsors time and offer them cost-effective administrative solutions by providing one-stop access to information and self-service features.
The new site allows sponsors to submit contributions electronically, analyze performance data, provide allocation instructions for forfeited amounts, consult reference information online, and download reports and member information. As well, plan sponsors will be able to do online member pre-enrolment and termination, as well as authorize access to certain protected areas of the site to their administrative staff.
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