Sunday, 7 December 2008

The People's Fund Manager(s)

One of the interesting by-products of the Government's intervention in the UK banking system that hasn't (to my knowledge) had any attention, is the fact that we the taxpayer are now owners of a few management businesses. I'm not on about UK Financial Investments, the vehicle set up by HMT to manage its stakes in the banks, though I think that we ought to think about how we want that to operate too.

Nope, I'm talking about the three asset management businesses that - provided the Lloyds TSB/HBOS merger goes through - we will by extension part own. RBS has its own asset management arm called... err... RBS Asset Management, though to be honest I'd never heard of them before I went to have a look. So presumably that must be quite a small outfit. But the fund management arms of Lloyds TSB (Scottish Widows Investment Partnership (SWIP)) and HBOS (Insight Investment) are both pretty sizeable.

As you've probably gathered from previous posts, I'm not that impressed by the record of institutional shareholders as owners of companies. And I get the impression from his comments at and RSA event a couple of months back that the new City minister Paul Myners doesn't think they've covered themselves in glory either. If that's the case, and if the Government still thinks it's a worthwhile policy objective to try and make the shareholder-as-owner model work, surely this suggests that they ought to take at least a brief look at how all partly-nationalised asset managers are dealing with ownership issues?

For example, does SWIP even disclose its voting record? HMT has been pushing fund managers to do this for two or three years, but I can't seem to find any voting data on SWIP's site. And what if they review the voting and engagement by one of the people's asset managers and discover that it isn't all that? I can't see why the Government should allow its policy objectives in this area to be undermined by any organisation(s) that it part owns. And it would set a very poor example if they don't encourage the fund managers they own to adhere to the best practice the Government has set out.


UPDATE: it turns out RBS Asset Management is s fund of hedge funds manager. What larks!

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