Copying and distributing are prohibited without permission of the publisher
Norway's sovereign fund sees higher stock loan revenue
02 March 2017
Bond lending increased to 49% of the total securities lending at the end of 2016
Norway’s giant sovereign wealth fund saw higher
returns from securities lending and repo trades in 2016.
The Government Pension Fund Global (GPFG) reported "secured
funding" revenue of 4.013 billion kroner (US$473m) in its
annual report this week.
The total, which includes earnings from securities lending
agreements, repurchase agreements and equity swaps, was 24%
higher than 2015.
Both bonds and equities are lent through the
fund’s securities lending program.
Bond lending increased to 49% of the total securities
lending at the end of 2016, up from 30% at year-end 2015.
Norges Bank Investment Management (NGIM) runs the fund and
appointed Citi as its global custody and securities lending
agent in 2014.
Last year NGIM’s experts
sent out a note on securities lending,
criticising dividend arbitrage strategies in programs.
They added that a well-thought-out regulatory environment
rather than ad-hoc intervention is crucial for the securities
In addition, NGIM called on intermediaries, whether prime
brokerages or agents such as custodians, to focus on providing
increased transparency into the securities lending market.
Overall, Norway's GPFG returned 6.9%, or 447 billion kroner
(US$52.6bn), in 2016 - up from 2.7% return in 2015.
Equity investments returned 8.7%, while fixed-income
investments returned 4.3%.
Investments in real estate returned 0.8%.