Agent Lending Newsletters

Client Profile: Petercam

An interview with Luc Van den Brande, Board member, Petercam B Fund & Petercam Horizon B

Can you provide a brief summary of Petercam and describe your main business?

LVB: Petercam was founded in 1968 with the merger of two Brussels-based investment firms, Peterbroeck and Van Campenhout, with a history dating back to 1919. Petercam is a leading independent investment firm specializing in private banking, institutional asset management and investment banking (corporate finance and brokerage activities) with clients across Europe and the United States. Based in Belgium, Petercam operates from offices in Brussels (headquarters), Antwerp, Ghent, Hasselt, Knokke, Leuven, Liège, Roeselare and Wavre. A global company, it also has offices in Germany, Italy, Luxembourg, the Netherlands, Spain and Switzerland. Petercam has 421 staff and managed assets totaling approximately EUR 14 billion for private and institutional clients, corporates and public institutions.

Petercam B Fund and Petercam Horizon B are managed by Petercam Institutional Asset Management, a UCITS management company and an affiliate of Petercam.

How was 2013 for your business and are you optimistic or pessimistic about 2014?

LVB: From an economic viewpoint, the market was looking positive in early 2013. The U.S. economy continued to recover, while there were increasingly positive signals from Japan and Europe. On the other hand, there were disappointments throughout the emerging markets from an overall performance perspective. Meanwhile, the possibility of a change in U.S monetary policy captivated markets. Against this backdrop, equity markets have performed quite well, while conditions in bond markets have been more difficult.

There were also changes in the legislative and fiscal environment that our firm and clients operate in, as authorities continued to drive for regulatory change to improve the operation of financial markets. This has been visible in Luxembourg and Switzerland, where historical principles have been reevaluated within the EU as a whole, as demonstrated by regulatory authorities strengthening their supervision through a number of new directives that have had an impact on the asset management industry.

Looking ahead, we are optimistic about the outlook for 2014. Developed markets are in a clear recovery phase that looks set to strengthen as fiscal tightening eases next year. Increasing activity in developed markets will have a positive impact on emerging markets. Strengthening recovery implies that the end of extremely loose monetary policy is coming closer, and in our view, this will be a source of volatility for financial markets.

With global equity values close to near all time highs, do you feel the issues and challenges in Europe are behind you?

LVB: There are still issues and challenges to overcome, particularly in relation to regulation, such as ESMA, AIFMD, UCITS V, and now VI, under consideration. It is our role to navigate and implement for the benefit of the fund holders, so there is still work to be completed. On the positive side, standardization across Europe, particularly from a documentation perspective, can only be a good thing.

How long have you been engaged in Securities Lending?

LVB: Since the first quarter of 2007, so for over six years.

How important is Securities Lending to you and do you feel the returns outweigh the risk and overhead? Why?

LVB: The main business of Petercam Institutional Asset Management is fund management and the creation of return for investors by actively managing our funds. Securities Lending creates additional revenue for the fund holders. We operate our program within a strict risk framework and the indemnification J.P. Morgan provides to us is important in providing the level of comfort we require. The management company monitors the program on a daily basis.

Petercam Institutional Asset Management adopts a conservative, risk avoidant approach. We appreciate that our Agent Lending Portfolio Advisor at J.P. Morgan is well aware of our Securities Lending program strategy and is able to highlight what potential expansions mean from a risk and reward perspective. Our current levels of return make our participation worthwhile, however, we do continually validate participation and consider opportunities for expansion and flexibility accordingly.

You were a recent participant at the IMN's 18th Annual European Beneficial Owners' Securities Lending conference. What was your main takeaway?

LVB: This is our second year at the conference and attendance is absolutely beneficial. The conference allows us to understand the issues, drivers and demands from a wider industry perspective and helps us understand the business more. The closed door session with other beneficial owners was particularly valuable to obtain honest feedback and provided insight into what other beneficial owners seem to be doing. Understanding the impact of current world and changing legislation is key. Regulation and tax has an impact on the Securities Lending business, but whilst not always a direct impact, it changes the way in which Securities Lending operates. Another key takeaway is that Securities Lending revenue drivers are subject to constant change, therefore flexibility is required and Petercam needs to constantly remain engaged.

Who will win the 2014 FIFA World Cup?

LVB: Although Belgians are modest by nature, we are hoping that our national team will play an excellent tournament. The current Belgian selection is a true "grand cru" and most footballers are playing at the highest level and are key players in the best foreign football leagues in the world. We took the first hurdle with flying colors, eight victories in nine games; we only had three goals against us and scored 14 times! The statistics are already working in our favor!

Agent Lending Newsletter, 3Q 2013


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