German bonds face sell-off as ATP urges Merkel to block added tax
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • H.I.G. raises $1.4 billion for latest credit fund
      James Zelter
      Private credit managers supersizing their loans
      Deborah Pederson and David J. Rothenberg
      Arena hires 3 to boost global marketing of private credit strategies
      BentallGreenOak agrees to acquire Metropolitan Real Estate Equity
    • Kieran Mistry
      Hymans Robertson picks head for new non-traditional risk transfer unit
      Troy Saharic
      NEPC brings on director of new business development
      Bill Foley
      Foley-backed SPAC agrees to $7.3 billion deal with Alight
      Jason Schwarz, chief operating officer of Wilshire,
      New owners have big plans for future of Wilshire
    • An American flag flies at the U.S. Capitol in Washington on March 6, 2021
      House expected to pass COVID-19 relief bill with multiemployer aid
      watch video
      5:39
      The coronavirus pandemic: One year later
      Gary Paulin
      Outsourced trading becoming side effect of virus for managers
      Logistics becomes shining star of investing during virus crisis
    • Michael Madowitz
      Taking a workforce break to raise children hurts retirement savings – economist
      David Blanchett
      Morningstar says women build better DC plans
      Morningstar turns detective to find gender from 5500s
      Desktop with document showing pie chart with investment types along with a calculator
      OECD proposes revision of its DC ‘good design’ roadmap
    • Tool gives investors insight into companies' alignment with U.N. goals
      Preqin: Alts industry showing some progress on gender equality
      The tower of Stockholm City Hall rise above the city's skyline on Aug. 6, 2020
      Swedish funds managing $250 billion get slammed for ESG record
      Vapor rises from a petrochemical plant
      New York State Common inks more climate pacts
    • University of Washington/University of Minnesota
      Parametric creates quantitative fellowships for diverse students
      Roger Ferguson
      Finance museum honors TIAA's Roger Ferguson
      ERISA attorneys are taken to task by federal judge
      Springboard illustration
      LGPS Central execs to mentor U.K. students
    • Robert 'Rob' Shafir listens during a Senate Permanent Subcommittee on Investigations hearing in Washington on Feb. 26, 2014
      Sculptor hedge fund hits sixth straight year of outflows
      The WallStreetBets forum on the Reddit Inc. website on a laptop computer and the GameStop logo on a smartphone in an arranged photo.
      GameStop frenzy has hedge fund managers rethinking next moves
      Gabe Plotkin, chief investment officer and portfolio manager of Melvin Capital Management, speaks during the Sohn Investment Conference in New York on May 6, 2019
      Citadel, Point72 back Melvin with $2.75 billion after losses
      Shanghai skyline
      Global hedge funds struggle even in a more open China market
    • Washington Community Foundation picks SEI as outsourced CIO
      Tool gives investors insight into companies' alignment with U.N. goals
      Dallas-Fort Worth Airport lands $23 million in 3 alts funds
      A logo outside the Greensill Bank offices in Bremen, Germany, on March 3, 2021
      Greensill files for U.K. administration after swift unraveling
    • A J.P. Morgan is displayed on a door in New York on April 14, 2009
      JPMAM lights up Project Spark to invest in diverse alts managers
      Marc Rowan, co-founder of Apollo Global Management, speaks at the annual Milken Institute Global Conference in Beverly Hills, Calif., on April 29, 2014
      Apollo-Athene merger billed as ‘natural progression’
      Andrew Morrison
      Janus Henderson chooses global head of client experience
      Jim Wiant
      Denmark’s Capital Four picks CEO to establish U.S. presence
    • NISA Pension Surplus Risk index inches up in February
      CalSTRS adds alts investments to ESG-themed portfolio
      District of Columbia Retirement Board executive director to retire
      Police car in the city of San Antonio
      San Antonio fund terminates Lazard from emerging markets strategy
    • Andrew Morrison
      Janus Henderson chooses global head of client experience
      Jim Wiant
      Denmark’s Capital Four picks CEO to establish U.S. presence
      Edwina Ho
      Cambridge Associates selects senior director for new Hong Kong office
      District of Columbia Retirement Board executive director to retire
    • The Charging Bull statue is covered in snow near the New York Stock Exchange on Feb. 11, 2021
      Bain: Private equity managers finish 2020 strong
      Carlyle secures $4.1 billion ESG-related credit facility
      Hamilton Lane raises $3.9 billion for fifth secondary fund
      PSG closes first Europe-focused fund at $1.5 billion
    • AEW chooses head of fund operations and debt finance
      Sebastiano Ferrante and Jocelyn de Verdelon
      PGIM Real Estate turns to staff to fill new roles
      European managers key in on specialist strategies
      Ingrid Jacobs
      Jones Lang LaSalle brings on head of diversity and inclusion
    • Jackie Walorski
      Contribution catch-up for caregivers gaining favor
      Neal and Brady
      Retirement security could be only issue both sides accept
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
    • COVID-19: One year in
      Charging Bull, sometimes referred to as the Wall Street Bull or the Bowling Green Bull, a bronze sculpture that stands on Broadway just north of Bowling Green in the Financial District of New York City
      Top-performing managers Q4 2020
      P&I 1,000 largest retirement plans: 2021
      Retirement in emerging markets
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • Washington Community Foundation picks SEI as outsourced CIO
      PennPSERs puts $375 million into 2 alts funds
      Dallas-Fort Worth Airport lands $23 million in 3 alts funds
      Enerpac Tool taps Fidelity as record keeper for 401(k) plan
    • Washington Community Foundation picks SEI as outsourced CIO
      PennPSERs puts $375 million into 2 alts funds
      Dallas-Fort Worth Airport lands $23 million in 3 alts funds
      Enerpac Tool taps Fidelity as record keeper for 401(k) plan
    • Emerging Markets Debt Mandate
      Emerging Markets Equity Mandate
      Investment Consultant
      Independent Investment Consulting Services
    • Taiwan Semiconductor’s No. 1 in the emerging markets book
      U.S. fixed-income returns post another positive year
      Nasdaq delivers an impressive year
      U.S. dollar's recent decline continues
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • Vaccination cartoon
      Rallying to meet the ongoing COVID-19 challenge
      Tesla cartoon
      Don’t confuse wealth creation with retirement saving
      Top 1000 cartoon
      Top 1,000 retirement plans weather storm just fine
      Infrastructure cartoon
      You must go big on infrastructure, Mr. President
    • Investment Trends: Looking Ahead Across Equity Sectors
      Rethinking Market and Reference Data Management
      China is embarking on a new stage of growth
      Gold Outlook 2021
    • Sameer Shalaby
      Commentary: Why should investors care about treasury management?
      David Blitzstein
      Commentary: Without a national retirement policy, Americans face a future of pension crises
      Lawrence Cunningham
      Commentary: Gensler should keep Clayton’s pragmatic proxy adviser rules
      My-Linh Ngo
      Commentary: Pension funds and the role of the debt market in the fight against climate change
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • P&I Content Solutions
      Emerging Markets: Expanding Investors' View
      P&I Content Solutions
      How will gold react?
      To people shaking hands
      P&I Content Solutions
      Lessons From 2020: Today’s OCIO Model Passes a Major Test of Governance
      Sponsored Content By MassMutual
      Leveraging Data to Manage Risk
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      5:39
      The coronavirus pandemic: One year later
      watch video
      0:45
      Private funds weathered 2020 turmoil
      watch video
      0:59
      Secure choice and other retirement plans at a state level
      watch video
      3:33
      P&I 1,000 by the numbers 2021
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Looking Beneath the Headlines – and Below Investment Grade – for Alpha Potential
    • POLL: Working after the pandemic
      POLL: The year ahead for the 1,000 largest U.S. retirement funds
      POLL: The Biden administration’s economic plans
      POLL: Retirement issues in 2021
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • Tradewatch for Q4 2020
      Graphic: Is it time for DC plans to embrace private equity?
      By the Numbers for February 2021
      Top Performing Managers of Managed Domestic Broad-Market Fixed Income, 4th Quarter 2020
  • Events
    • Conferences
    • Webinars
    • Defined Contribution Spring Virtual Series
      DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Looking Beneath the Headlines – and Below Investment Grade – for Alpha Potential
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. INVESTING & PORTFOLIO STRATEGIES
June 20, 2013 01:00 AM

German bonds face sell-off as ATP urges Merkel to block added tax

Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Bloomberg

    ATP, Hilleroed, Denmark, might sell $36 billion of long-term German bonds unless Chancellor Angela Merkel moves to block a tax on financial transactions.

    Such a levy “would instantly destroy our business model and would force us to invest differently,” Carsten Stendevad, CEO of the $140 billion pension fund, said in an interview at his office in Copenhagen. “The moment they would do this, many investors would start looking for other safe havens.”

    Executives overseeing Europe's pension savings are adding their voice to bank industry warnings that a tax on financial trades would miss its mark and end up hurting average citizens. ATP estimates the levy would cost it “hundreds of millions of dollars,” eroding pensioners' returns. Ms. Merkel said the German government is listening to investor complaints about the proposed levy and will take their views into account.

    Moving ahead with a tax model that hits pension savers “would obviously be a very bad thing to do,” Ms. Merkel said in a June 14 interview at the Chancellery in Berlin. Still, she restated her government's commitment to some form of tax on transactions, citing the disparity between value-added taxes on consumer goods and “basically free” financial transactions.

    Policymakers in Europe originally proposed the tax in an effort to prevent a repeat of the worst financial crisis since the Great Depression. European Union Tax Commissioner Algirdas Semeta has said the levy would encourage pension funds to avoid secondary markets and stick to long-term investments.

    'Pile of bonds'

    The proposal doesn't take into account how pension funds operate, said Guus Warringa, an Amsterdam-based board member and chief legal counsel at APG Asset Management, which oversees $458 billion in pension assets.

    “Pension funds are indeed long-term investors, yet the assumption they have a pile of bonds which they put into a safe until they mature 20 years later is simply wrong,” Mr. Warringa said. “Markets, interest rates change. It would imply we would have had to keep our exposure to Greece unchanged. We wouldn't get away with such a policy.”

    APG, the investment management unit of Heerlen, Netherlands-based APG Algemene Pensioen Group NV, would probably “invest less in countries that have a financial transactions tax,” he said.

    Ms. Merkel said last week she's talking to investors about the transactions tax. “I know their concerns and we have not come to the end of our deliberations,” she said.

    Trading tax

    The EU unveiled its plan on Feb. 14 for a 0.1% tax on stock and bond trades and 0.01% on derivatives trades with ties to participating countries. To prevent traders from escaping the levy by operating outside the tax zone, the EU plan invokes “residence” and “issuance” ties to firms in participating nations. That means, for example, that a French bond traded in London would still be affected.

    The taxes would be collected worldwide by Germany, France and nine other EU nations that have signed up. Denmark, where ATP is based, has rejected the tax in its current form, as has the Netherlands.

    The proposal “will be an entirely different matter from what was intended if it impacts those nations not participating and disrupting the inner market,” Danish Economy Minister Margrethe Vestager said in a June 14 interview. “This will obviously have consequences for Denmark, as it will for all of the 16 EU nations that are not part of this.”

    German politics

    Ms. Merkel's Christian Democratic Union party, which faces September elections, has backed a financial transaction tax. The CDU is urging that the measure be introduced “as quickly as possible,” while “safeguarding the interests” of Germany's financial industry, according to a draft of the party's campaign platform.

    Mr. Stendevad, who left his job as a managing director at Citigroup Inc. in New York to take the helm at ATP in April, said efforts to rein in the financial industry are needed, although the methods under consideration are proving clumsy.

    “Even things with good intentions can have significant unintended consequences,” Mr. Stendevad said. The proposed financial tax is “a good example,” he said. “The bill will be paid by the Danish pensioners, not the banks.”

    Should the tax pass, the challenge for ATP would be to find a suitable alternative to German government bonds, he said. Other AAA rated euro-region bonds such as those from Finland and the Netherlands lack the liquidity ATP needs, while U.S. Treasury bonds have a currency risk, Mr. Stendevad said.

    ATP already owns 70% of 30-year Danish government bonds and the remaining stock is too small to fill the hole that would be left if the fund sold its German government bonds, Mr. Stendevad said.

    “You really have to think through all the unintended consequences of these regulations,” Mr. Stendevad said. “Regulation as retribution is not a good tool.”

    Related Articles
    EU proposes financial transactions tax
    U.S. financial transaction tax bill introduced in Congress
    European Court of Justice rejects U.K.'s challenge to financial transaction tax
    Danica Pension hires CIO from ATP
    Recommended for You
    More funds testing water on crypto-related assets
    More funds testing water on crypto-related assets
    Money managers eager to make leap to opportunity zone investing
    Money managers eager to make leap to opportunity zone investing
    Index investing: Not as passive as you might think
    Index investing: Not as passive as you might think
    How will gold react?
    Sponsored Content: How will gold react?
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Rethinking Market and Reference Data Management
    Investment Trends: Looking Ahead Across Equity Sectors
    China is embarking on a new stage of growth
    Gold Outlook 2021
    Shifting DC Times - Winter 2021
    GP-LED OPPORTUNITIES AT THE SMALLER END OF THE MARKET
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center