Singapore Sovereign Fund GIC Promises Greater Disclosure.
A Singapore sovereign wealth fund said it plans to become more transparent amid concerns over its increasing influence following large investments in troubled financial institutions such as UBS and Citigroup, newspapers reported Monday.
The Government of Singapore Investment Corporation, or GIC, is working with the city-state's Finance Ministry on a document that would provide more information on the fund's processes and governance and the purposes of its investments, The Straits Times newspaper said, citing the GIC's deputy chairman, Tony Tan.
The fund would also report the rate of return on its investments more regularly, Tan said. "We believe it is good to have better understanding, some form of code of good practice, so that operations of the (sovereign wealth funds), and the reactions of the recipient countries, will not lead to further problems," Tan was quoted as saying.
Tan was speaking to reporters at the end of high-level discussions on sovereign wealth funds at the World Economic Forum in Davos, Switzerland, the paper said. A GIC corporate communications official confirmed that Tan's reported comments were accurate.
The GIC and Singapore's state-run Temasek Holdings are among the world's biggest sovereign funds, with assets of more than US$100 billion (euro68.6 billion) apiece, according to their Web sites.
They, like funds from the Middle East and China, have been investing in major Western financial institutions that have lost billions of dollars on bad bets in the U.S. mortgage market. Rising delinquencies and defaults among mortgages have forced banks to write down the value of bonds and debt backed by the troubled loans. Hard-hit U.S. banks welcomed the needed capital.
GIC invested US$9.75 billion (euro6.7 billion) in UBS, the Swiss bank said in December. Earlier this month, Citigroup said it would receive US$6.9 billion (euro4.7 billion) from GIC for a 4 percent stake in the U.S. bank.
Tan said the GIC's investments in UBS and Citigroup were an unusual departure from the preferred, low-key approach it had adopted over the past 27 years of taking small stakes in a wide range of companies, over a long term. He also did not see the role of the GIC and other sovereign funds to be white knights "riding to the rescue of financial systems in the U.S. or Europe," the report said.
In the UBS deal, Tan said the fund had decided against taking up an invitation by the lender to have a nominee elected to its board, the report said. Tan said Singapore supports a move to draw up a code of best practices for such funds, although he said that any new code should neither be overly prescriptive nor a one-size-fits-all affair, given the wide diversity of these funds, the report said. He added that the guidelines, should be largely voluntary and be kept general and flexible, while also applied to other investors such as hedge and private equity funds.
Found mostly in the oil-rich Middle East and Asia, but also in Russia and Norway, government-owned sovereign wealth funds control an estimated US$2.5 trillion (euro1.7 trillion) in assets, with analysts predicting the value of their holdings could reach as much as US$12 trillion (euro8.2 trillion) by 2015.
Critics contend that most of the funds offer little transparency and could flex their political power by taking key stakes in foreign defense companies, major banks and other companies.
A Singapore sovereign wealth fund said it plans to become more transparent amid concerns over its increasing influence following large investments in troubled financial institutions such as UBS and Citigroup, newspapers reported Monday.
The Government of Singapore Investment Corporation, or GIC, is working with the city-state's Finance Ministry on a document that would provide more information on the fund's processes and governance and the purposes of its investments, The Straits Times newspaper said, citing the GIC's deputy chairman, Tony Tan.
The fund would also report the rate of return on its investments more regularly, Tan said. "We believe it is good to have better understanding, some form of code of good practice, so that operations of the (sovereign wealth funds), and the reactions of the recipient countries, will not lead to further problems," Tan was quoted as saying.
Tan was speaking to reporters at the end of high-level discussions on sovereign wealth funds at the World Economic Forum in Davos, Switzerland, the paper said. A GIC corporate communications official confirmed that Tan's reported comments were accurate.
The GIC and Singapore's state-run Temasek Holdings are among the world's biggest sovereign funds, with assets of more than US$100 billion (euro68.6 billion) apiece, according to their Web sites.
They, like funds from the Middle East and China, have been investing in major Western financial institutions that have lost billions of dollars on bad bets in the U.S. mortgage market. Rising delinquencies and defaults among mortgages have forced banks to write down the value of bonds and debt backed by the troubled loans. Hard-hit U.S. banks welcomed the needed capital.
GIC invested US$9.75 billion (euro6.7 billion) in UBS, the Swiss bank said in December. Earlier this month, Citigroup said it would receive US$6.9 billion (euro4.7 billion) from GIC for a 4 percent stake in the U.S. bank.
Tan said the GIC's investments in UBS and Citigroup were an unusual departure from the preferred, low-key approach it had adopted over the past 27 years of taking small stakes in a wide range of companies, over a long term. He also did not see the role of the GIC and other sovereign funds to be white knights "riding to the rescue of financial systems in the U.S. or Europe," the report said.
In the UBS deal, Tan said the fund had decided against taking up an invitation by the lender to have a nominee elected to its board, the report said. Tan said Singapore supports a move to draw up a code of best practices for such funds, although he said that any new code should neither be overly prescriptive nor a one-size-fits-all affair, given the wide diversity of these funds, the report said. He added that the guidelines, should be largely voluntary and be kept general and flexible, while also applied to other investors such as hedge and private equity funds.
Found mostly in the oil-rich Middle East and Asia, but also in Russia and Norway, government-owned sovereign wealth funds control an estimated US$2.5 trillion (euro1.7 trillion) in assets, with analysts predicting the value of their holdings could reach as much as US$12 trillion (euro8.2 trillion) by 2015.
Critics contend that most of the funds offer little transparency and could flex their political power by taking key stakes in foreign defense companies, major banks and other companies.
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