NPS to empower overseas offices to speed up cross-border deals

Jan 20, 2017 (Gmt+09:00)

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The National Pension Service (NPS) has announced a plan to give its foreign offices more authority so that they can propose investment ideas directly to the South Korean pension fund’s investment review committees.

The $450 billion pension scheme runs three overseas offices in New York, London and Singapore. Their functions have been limited to monitoring international financial markets and building networks with global investment managers, raising questions about their usefulness and effectiveness.

NPS has issued the draft revision to its internal regulations on the Investment Management’s foreign offices, with a view to expanding their authority to deal sourcing and directly submitting investment proposals to the fund’s committees, beyond simply exploring investment opportunities. It will receive opinions from the public by early next month, before finalizing the revision.

“By allowing foreign offices to submit ideas to relevant committees which have been done by the head office divisions, we can speed up the process of review and decision-making on explored investment cases,” the pension fund said in a notice posted on its website on Jan. 18.

The planned rule change over the foreign offices’ functions does not require approval of the welfare ministry overseeing the NPS.

At the same time, the world’s third-largest pension fund is in the process of hiring nine new employees to be stationed in foreign offices, Yonhap Infomax reported on Jan. 20. With the new hiring, the number of its foreign office-based employees will rise to 40, including those deployed from the headquarters in South Korea, it added. NPS’ Investment Management unit has about 260 employees.

The NPS moves come as South Korean institutional investors are piling into overseas alternative assets to shore up investment returns, amid expectations about new US infrastructure projects planned under the administration of Donald Trump.

Meanwhile, NPS chief Hyung-pyo Moon, who has been in arrest since late December, was indicted by the special prosecutor's office earlier this week on charges of abusing power and making false testimony in connection with the bribery scandal involving President Park Geun-hye.

By Chang Jae Yoo

yoocool@hankyung.com