Not only did the fund have significant exposure to the bank, but its holdings increased nine-fold in August, when the fund’s manager, Norges Bank Investment Management (NBIM), added 15 million shares to its portfolio. This means the fund could be one of the biggest losers in the Lehman affair. According to a list of investors published by Mutual Fund Facts About Individual Stocks, the fund had 17.5 million shares in the bank.
NBIM, however, refused to comment about any losses or the most recent value of its Lehman holdings.
“We are very concerned and are following the situation closely. But we only disclose our holdings in our annual report and will not comment on any single investment,” said Siv Meisingseth, head of communication at NBIM.
The latest official figures on the fund’s investments revealed holdings in the firm worth more than NKr500m at the end of 2007.
To make matters worse, the fund also has debt securities in Lehman, which, at the end of 2007, totalled NKr4.4bn. The recovery value of Lehman bonds, which after the bankruptcy have been trading at distressed levels, remains unclear and could potentially mean more bad news for the Norwegian giant. Its holdings in the troubled US insurer AIG are an additional cause for concern.
Furthermore, the Norwegian fund has both bond and equity holdings in a number of Lehman subsidiaries, which risk being dragged down along with its parent company. It also has foreign exchange reserves with the bankrupt firm, but those investments are likely to be safe.
The Norwegian Government Pension Fund – Global posted returns of -1.9 per cent during the second quarter of 2008.
