Nicolai Tangen May Invest His Fortune In Government Securities – E24

In order to take over as the new director of the Petroleum Fund, Nicolai Tangen agreed to put his personal fortune of one billion in the bank. Now Norges Bank writes that this will be difficult.

In a letter to the Ministry of Finance, the central bank writes that there are a “limited number of banks with a sufficient rating and solvency where it is relevant to place personal bank deposits of the size in question.”

– There are also extensive and lengthy procedures related, among other things, to AML (anti-money laundering) rules that are implemented in banks for large deposits. Overall, therefore, it has been difficult to diversify investments enough to avoid significant exposure to individual banks, the bank writes.

Therefore, the central bank allows Tangen to now place the money, which in total amounts to about 8 billion NOK, elsewhere.

Government securities

The amount consists of about NOK 5 billion, which Tangen has previously invested in funds, and NOK 2.9 billion in cash deposits.

It’s the five billion that Tangen agreed to transfer to a bank account just before starting his new job.

Norges Bank writes that it has now considered other investment alternatives that “at the same time safeguard the guidelines of the Supervisory Board and the recommendation of the Finance Committee, as well as the assumptions made by the Minister of Finance.”

– A natural starting point is investments in close substitutes for bank deposits relative to profitability, risk and liquidity. Also, the investments are not supposed to overlap with the NBIM mandate, the bank writes.

In this context, Tangen, in addition to bank deposits, is expected to have the opportunity to invest 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.

– It cannot affect market prices.

Norges Bank writes that the purpose of investments in such securities is to distribute funds and avoid unwanted exposure to individual banks, not to achieve higher returns.

– These are both deep and liquid markets where individual investors cannot influence market prices.

The funds can be invested directly in government securities or through funds, according to Norges Bank.

– The funds cannot be invested in equity instruments or corporate bonds, including bank bonds.

The letter indicates that it is not intended to continue the plan with a “blind trust” and a special shop steward (“Proxy”) representing Tangen before the trustee.

The central bank believes that a “blind trust” will no longer be necessary, with a management mandate that only allows bank deposits and short-term government securities.