Risk free investing by the NZ Super fund

$200m NZD given to Banco Espirito Santo, a Portuguese bank, to bail them out. The bank folds, and the underlying insurance is voided.

These guys make Terry Serepisos look like George Soros.

Almost $200 million in taxpayers’ money invested through the New Zealand Superannuation Fund has been lost after the collapse of a Portuguese bank where the money was invested – supposedly as a “risk-free” loan.

The fund, set up with public money to partly cover the retirement costs of Baby Boomers, revealed yesterday it had been caught up in the collapse of Banco Espirito Santo (BES), and a US$150 million investment made in July had been wiped out.

The investment was a contribution to a Goldman Sachs-organised loan to the bank, but only weeks after the money was injected it imploded. President and founder Ricardo Salgado was arrested as part of a criminal investigation into tax evasion.

After disclosing billions of euros in losses, and facing a run on funds by depositors, the bank collapsed in a heap and was broken up in August.

I know the NZ Super fund guys are lauded as NZ best investors, but surely a bit of housewife logic was needed when the term ?risk free? was bandied about. That?s because the only guys who usually offer risk free deals are Nigerians.

Good luck getting our money back…even if the NZ Herald has inflated the number by?using today’s exchange rate.

When calculate real loss they should have used the exchange rate for the time of transfer (July 14) If they want to include currency gains as losses (still poor form) then they needed to use the date of loss (August 14) or the maturation date of the loan (not discussed).

It’s not immaterial, they say 200M for their headline but it was really only around $170M. But hey what’s $30M for a paper that usually just makes stuff up.

For their view to be true you have to assume the money was left in USD till now. Also some of the ‘losses’ would still have been currency gains.

Effectively they are beating the government with $30M of unrealised currency gains but given this is all about loss, that’s pretty disingenuous.

– NZ Herald

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