The two biggest pension funds in the Netherlands announced recently that they are to form their own investment bank. ABP Investments and PGGM expect the new bank, called NIB Capital, to be up and running in the very near future, and say that it will initially focus on establishing its presence in the Benelux region. Securitization will play a significant part in its strategy
NIB Capital was formed from the ashes of Nationale Investeringsbank - which was bought in February last year by ABP and PGGM for E2 billion ($1.91 billion) - and other acquisitions made by the pension funds, such as Alpinvest and financial consultants Van Den Boom.
The enlarged bank was taken off the stock exchange while the restructuring took place and is now ready to target the asset management and private equity markets.
Increasing its participation in the structured finance markets will be one of the key aspects of the bank's new focus, said NIB Capital's general secretary Rob van Steick. "We have a small but focused team and we'll definitely look to utilize the experience we've got in securitization on a larger scale. There is a lot of money to be made in this area."
Initially, the bank will attempt to attract medium sized-customers. "We have to be realistic at this moment in time," admitted van Steick. "The likes of J.P. Morgan and Goldman Sachs are established international names and it takes time to establish a presence in the market."
In any case, the bank is not looking too far ahead. "We can't plan for 10 years into the future," said van Steick. "Who knows how business will be conducted at that time. E-commerce is changing the way things are done and we'll be actively looking into this area."
The securitization team is currently working on a repeat MBS transaction - the seventh in its Dutch MBS series - and is looking at other possible deals this year.
"At the moment we're putting together a deal that will be backed by our own portfolio of residential mortgages," said a structured finance official at the bank. "We're looking for it to be an E800 million deal and expect it to be launched sometime in May. If not then, it will certainly be completed by the end of the second quarter."
As for other deals, particularly in terms of arranging deals for other issuers, the official was more circumspect, but said there was more to come. "We have other deals in the pipeline that should see the light of day before the year's end," he said.
ABP is the largest pension fund in the Netherlands - and the second biggest in the world - with E148.5 billion in assets. PGGM, which primarily caters for health and welfare employees, has a E50 billion portfolio.