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The controversy surrounding the hiring of Nicolai Tangen as the new oil fund manager subsided on August 24, when the billionaire announced that he had sold Ako Capital and was going to put his fortune in the bank.
You won’t have to do that now, according to a letter from Norges Bank to the Finance Ministry. The reason for the decision is that there are very few banks that are strong enough and highly rated to invest as much money as Tangen. Furthermore, the anti-money laundering process for such large deposits is extensive.
“In general, it has been difficult to diversify investments enough to avoid significant exposure to individual banks,” the letter says.
Get into government securities
Instead of depositing the money in the bank, the funds should be placed in government securities with a short maturity of a maximum of 12 months. This is so as not to conflict with the Petroleum Fund’s government bond investments.
The funds cannot be invested in equity instruments or corporate bonds, including bank bonds, the letter states.
Investment firm Gabler will manage Tangen’s private government bond portfolio.
It is not planned to continue the scheme with a “blind trust” and a special trustee (“Proxy”) representing Tangen before the manager. With a management mandate that only allows bank deposits and short-term government securities, there will no longer be a need for a “blind trust,” the letter says.
Eight Billion Values
According to Norges Bank, the value of the fund’s investments is close to NOK 5 billion. Furthermore, it has cash deposits of around NOK 2.9 billion. In total, this equates to bank deposits of almost NOK 8 billion.
Nicolai Tangen can now deposit his fortune in:
- Norwegian and foreign government securities with a maturity of up to 12 months.
- Other securities issued by public authorities (including international institutions) with a maturity of up to 12 months.
The original plan was for Tangen to have the funds invested in equity funds, then have no knowledge or influence over management. He had to be cared for by Gabler and a lawyer who had to look out for Tangen’s interests but without having any dialogue with him.
According to the Norges Bank letter, the funds will be managed through a discretionary management mandate. This means that Tangen has no influence on individual investments. Those mandates are in line with NBIM guidelines, Norges Bank writes in the letter. (Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases via a link, which leads directly to our pages. Copying or other use of all or part of the content may only be done with written permission or as permitted by law. For more terms, see here.
