Norway to appoint Citi to hold $865bn fund: FT

Norway is to award US banking giant Citigroup the lucrative contract to hold its giant $865bn oil fund, after the bank convinced the fund's managers that it would be better able to manage its shift into emerging markets.

Norway to appoint Citi to hold $865bn fund: FT
The Citigroup Tower on the Shanghai waterfront (far right). Photo: Nikken
Citigroup poached the seven-year contract from its rival JPMorgan on the grounds that it is present in more markets,  running its own proprietary custodian services in 62 different countries.
Citigroup said that Norges Bank Investment Management, which manages Norway's fund, needed a bank with more geographical spread as it seeks to diversify its investments beyond key developed markets in the US, Europe and Japan. 
“For Norges to have a partner who is on the ground everywhere was essential, particularly in the new frontier markets,” Okan Pekin, global head of investor services at Citi, told the Financial Times newspaper. 
Norges Bank Investment Management is one of the world’s largest investors, with an average stake of 1.3 per cent in every company listed on the world's stock exchanges. 
After a recent push to diversify, emerging markets now account for about 10 per cent of the bank's $530bn equity portfolio. 

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Norway oil fund loses 18 billion euros in first half of 2020

Norway's huge sovereign wealth fund, the world's biggest, lost 188 billion kroner (18 billion euros, $21 billion) in the first half of the year as the global economy reels from the Covid-19 pandemic, the central bank said Tuesday.

Norway oil fund loses 18 billion euros in first half of 2020
Unusually empty slopes and ski lifts in Hemsedal in April. Photo: AFP

The fund, in which the Norwegian state's oil revenues are invested, was hit by plummeting share prices, with stocks accounting for 69.6 percent of its investments.

Its share portfolio posted a negative return of 6.8 percent in the first six months of the year.

At the end of June, the fund was valued at 10.4 trillion kroner (989 billion euros), up from the 9.98 trillion kroner seen at the end of the first quarter.

“The year started with optimism, but the outlook of the equity market quickly turned when the coronavirus started to spread globally,” the fund's deputy chief executive, Trond Grande, said in a statement.

“However, the sharp stock market decline of the first quarter was limited by a massive monetary and financial policy response,” he added.

Real estate investments, which represent 2.8 percent of the portfolio, also posted a negative return, of 1.6 percent, while bond investments, which account for 27.6 percent of assets, posted a gain of 5.1 percent.

“Even though markets recovered well in the second quarter, we are still witnessing considerable uncertainty,” Grande said.

The fund is meanwhile still mired in controversy over the appointment of a new chief executive.

Nicolai Tangen, a billionaire who founded the AKO Capital hedge fund in London, is due to take over the fund on September 1st, replacing Yngve Slyngstad who is retiring.

But critics have complained about Tangen's possible conflicts of interest, as well as his use of tax havens.

The central bank has meanwhile been criticised for irregularities in the recruitment process.

As a result, some major political parties are opposed to Tangen's appointment, and it remains up in the air.

READ ALSO: Norway's oil fund loses 1.3 trillion kroner ($125bn) in coronavirus crash