NETHERLANDS - Dutch pension funds today demonstrated they now have mixed views on the practice of lending securities of European and US banks, as the two largest schemes have taken opposite views on the practice this week.
APG, the newly-separated asset manager of the largest Dutch pension fund, ABP, said it has stopped lending stock of financial institutions facing "downward pressure" on their stock prices.
"We have stopped the lending of shares of a number of American and European banks. These are banks which currently experience the most downward pressure, among other things because of the activities of ‘short sellers'," a spokesman said in a written statement.
The fund thinks discouraging short-selling via the measure will contribute to more stable financial markets.
Meanwhile, PGGM, the second-largest Dutch pension fund, told IPE today it will continue the practice of stock lending.
"Putting a stop to stock lending would have a disrupting effect for us," a spokesman said, though stressing PGGM can appreciate the action by APG.
He said however: "The lending of shares creates liquidity, so can function as a lubricant in the markets."
APG, which said it had made the decision this week, follows in the footsteps of a number of US pension funds, among which Californian pension fund CalPERS and the pension fund of the state of New York.
The UK Financial Service Authority (FSA) yesterday imposed a temporary ban on short-selling financial stocks in a bid to stabilise stocks prices.
Short-selling has been blamed for helping drive down share prices, pushing several firms towards collapse.
If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on + 44 (0)20 7261 4622 or email carolyn.bandel@ipe.com
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