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Cutting out the middle man

19 December 2006

Norges Bank Investment Management expects its $280 billion in assets to double in the next five years. Marek Sanders speaks to securities lending manager Matthew Brunette about the fund's growth, agent lenders and corporate governance.

Matthew Brunette was relatively new to securities finance when he joined Norges Bank Investment Management (NBIM) as securities lending manager in 2002. But he quickly plunged into the market, eager to learn the ins and outs of the industry. He went to conferences to learn the market, lenders to learn the supply side and prime brokers to know the demand.

Subsequently, he has shifted all European ex-UK and Asian assets – about 60% of the desk's $100 billion equity lending portfolio – from their agent lender to auction directly to prime brokers as 12-month exclusives. The $40 billion in North American assets remain with their agent, JPMorgan, in its lending programme.

Brunette sees this as a mix of lending methods optimal for NBIM, but always flexible, and attributable in part to the size of the Norwegian fund's lending mandate, and in part to its hands-on attitude to sec?urities lending.

Room to...