National Pensions Reserve Fund, Dublin, has terminated State Street Global Advisors Ireland from a passive equity allocation, a week after an affiliated part of the State Street group was fined for overcharging in its transitions management business, confirmed a spokesman for the pension fund.
“State Street Global Advisors, a separate part of the State Street group from that involved in the overcharging issue, managed an indexed equity mandate for the NPRF,” the spokesman said. “However, following the publication of the U.K. Financial Conduct Authority's report on Friday, Jan. 31, their services were terminated by the NPRF on Monday, Feb. 3.”
The spokesman declined to comment on the size of the allocation and on whether there would be a search.
On Jan. 31, the FCA announced that it had fined State Street U.K. £22.9 million ($37.7 million) the transition management mistakes.
According to the FCA, the firm had overcharged six clients a total of $20.2 million. The National Treasury Management Agency, the manager of the NPRF, was repaid €3.2 million ($4.4 million) by State Street Bank Europe for the overcharging, according to a statement by the NTMA on Jan. 31. The overcharging related to trades undertaken as part of a €4.7 billion program of asset disposals on the NPRF's behalf in 2011.
The NTMA said it had been awaiting the outcome of the FCA's investigation to decide on further action with State Street.
“The FCA review was critical of the business controls within the U.K. transition management business and the control functions in the U.K.,” according to a statement by State Street. “We acknowledge these as historical problems and have undertaken extensive efforts to address both, including strengthening the controls, procedures and governance within our U.K. transition management business.
“Unfortunately, as a result of this review, the National Treasury Management Agency (NTMA) has decided to terminate their investment mandate with SSgA (State Street Global Advisors) Ireland. “SSgA Ireland was not part of the FCA review or its findings,” according to the State Street statement.
A spokeswoman for State Street did not comment beyond the statement.