An Argentine government proposal to nationalize nearly $30 billion in pension assets puts in doubt the future of money managers operating in that country.
Some experts say it would mean the end of business for most, if not all, of the 10 companies offering private plan alternatives to the government's social security system.
Argentine President Cristina Fernandez de Kirchner signed a bill Oct. 21 that would allow the Administración Nacional de la Seguridad Social, the country's social security system, to take control of 94.4 billion pesos (US$29.3 billion) of assets from the private funds. The measure still needs approval from the Argentine congress, where Ms. Fernandez' party has a controlling majority.
Pilar Teixeira, spokeswoman for ING Groep NV, Amsterdam, said until congress acts, it is too early to comment on the future of the plans, known as Administradoras de Fondos de Jubilaciones y de Pensiones.
“Nobody has the answer” to what will happen, Ms. Teixeira said. “At this point, ING is just assessing the situation.”
In December 2007, ING bought Origenes AFJP SA, which had pension assets of $5.3 billion as of Sept. 30, according to records obtained on the website of the Superintendencia de AFJP, which regulates Argentine private pensions.
Malcolm Wallis, spokesman for HSBC Holdings PLC, London, declined to comment on what might happen with HSBC's Maxima SA AFJP, which had assets of $3.4 billion as of Sept. 30.
Spokesmen at Metropolitan Life Insurance Co., New York, did not respond to several requests for comment on the fate of that company's Met AFJP SA, Argentina's largest with $5.4 billion.
The other AFJP managers, with assets as of Sept. 30, are: Consolidar SA, $5.3 billion; Nacion SA, $4.4 billion; Arauca Bit SA, $3.1 billion; Unidos SA, $800 million; Previsol SA, $750 million; Profesion + Auge SA, $425 million; and Futura SA, $400 million.
“They'll (likely) be taken out of their businesses,” said Nick Chamie, global head of emerging markets research at RBC Dominion Securities Inc., Toronto, with C$150 billion (US$119 billion) under management. Given the government's cash-strapped status, “I can't see (the government) offering much in the way of compensation” to the managers.
“The AFJPs themselves see it as the end of their business and private pension schemes,” said Thomas Ciampi, director of Fundpro.com, a market analysis, news and research site for mutual fund investors in Latin America. “They'd be without any funds to manage.”