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Norway’s oil fund warns of trade wars impact

The managers of Norway's sovereign wealth fund, the world's biggest, expressed concern Tuesday about global trade tensions, which could heavily impact its value.

Published: 21 August 2018 21:42 CEST
Norway's oil fund warns of trade wars impact
Trond Grande, the deputy chief of Norges Bank Investment Management, explains the second quarter result. Photo: Mariam Butt/NTB Scanpix
The fund posted a positive return of 1.8 percent, or 167 billion kroner (17.2 billion euros, $19.8 billion), in the second quarter, helping erase a loss of 171 billion kroner in January-March that was attributed to a volatile 
stock market.
   
The Government Pension Fund Global, which saw its total value swell to 8.33 trillion kroner (859 billion euros, $991 billion) by the end of June, manages the country's oil revenues in order to finance Norway's generous welfare state when its oil and gas wells run dry.
   
But Norway's central bank, which runs the fund, said geopolitical and trade tensions presented a risk.
   
“It's fair to say that increased trade barriers or even trade wars will not be beneficial for the fund as a long term global investor,” Trond Grande, the deputy chief of Norges Bank Investment Management, told reporters.
   
Markets are worried about a trade dispute between the United States and China. Accusing Beijing of unfair competition, the US administration is considering slapping a new round of levies worth $200 billion on Chinese goods.
   
Talks between the two slated for Wednesday and Thursday aimed at resolving the dispute have however eased concerns somewhat. 
   
Following US-Turkey tensions that sent the Turkish lira and the Istanbul stock market tumbling, the Norwegian fund said its assets there were worth less than the 23 billion kroner they were at the beginning of the year.
   
“We've seen the market rise for a long time, that there are different political and geopolitical events in the world that can affect the market, and we have to be prepared for the fact that (the value of) the fund can go down a lot,” Grande concluded.     
   
The fund's strong second quarter was attributed primarily to its share portfolio, which accounts for 66.8 percent of its investments and which rose by 2.7 percent.
   
Real estate holdings, which account for 2.6 percent of its holdings, rose by 1.9 percent, while bond investments, which represent 30.6 percent, remained flat. 
   
Faced with falling oil revenues in recent years, the Norwegian government has been tapping the fund to finance public spending since 2015. But with oil prices recovering, the fund registered its first inflow in three years in June.

BANK

Deutsche Bank to pay $130m to settle US bribery probes

Deutsche Bank will pay $130 million to settle a foreign bribery probe and fraud charges in precious metals trading, US officials announced on Friday.

Published: 9 January 2021 15:08 CET
Deutsche Bank to pay $130m to settle US bribery probes
A woman walks past the offices of Deutsche Bank in London. Photo: Tolga Akmen / AFP
The bribery case relates to illegal payments and to false reporting of those sums on the bank's books and records between 2009 and 2016, the Department of Justice said in a press release.
   
The bank “knowingly and wilfully” kept false records after employees conspired with a Saudi consultant to facilitate bribe payments of over $1 million to a decision maker, the DOJ said.
   
In another case, the bank paid more than $3 million “without invoices” to an Abu Dhabi consultant “who lacked qualifications… other than his family relationship with the client decision maker,” the DOJ said.
   
In addition to criminal fines and payments of ill-gotten gains, Deutsche Bank agreed to cooperate with government investigators under a three-year deferred prosecution agreement.
 
   
In the commodities fraud case, Deutsche Bank metals traders in New York, Singapore and London between 2008 and 2013 placed fake trade orders to profit by deceiving other market participants, the DOJ said.
   
The agreement took into account Deutsche Bank's cooperation with the probes, DOJ said.
   
“Deutsche Bank engaged in a criminal scheme to conceal payments to so-called consultants worldwide who served as conduits for bribes to foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” said Acting US Attorney Seth D. DuCharme of the Eastern District of New York.
   
“This office will continue to hold responsible financial institutions that operate in the United States and engage in practices to facilitate criminal activity in order to increase their bottom line.”
   
“We take responsibility for these past actions, which took place between 2008 and 2017,” said Deutsche Bank spokesperson Dan Hunter, adding that the company has taken “significant remedial actions” including hiring staff and upgrading technology to address the shortcomings.
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