GAM Suspends Investment Director Tim Haywood

Swiss asset management firm GAM has suspended one of its top portfolio managers after an internal investigation raised issues of his risk management procedures and record keeping.

The company said it suspended London-based Tim Haywood, the business unit head for its absolute return bond fund, over the issues; however, it also said the investigation hadn’t raised concerns over Haywood’s honesty, nor had it established any material client detriment as a result of the issues. However, it added that the latter is still under review.

GAM didn’t specify the risk management or record keeping issues involved, nor did it say what initiated the investigation. It also didn’t say how long Haywood would be suspended.

In Haywood’s absence, investment directors Jack Flaherty and Alex McKnight have assumed joint responsibility for the absolute return bond fund and other associated portfolios. Flaherty has been one of the co-managers of the fund for more than six years, while Alex McKnight has been a senior member of the team for the past 11 years, according to GAM.

For more stories like this, sign up for the CIO Alert newsletter. 

The total assets in the absolute return bond portfolios as of the end of June were CHF11 billion ($11.1 billion). Haywood is also a named manager of CHF2.9 billion in trade finance funds, and of CHF653 million in other fixed-income portfolios.

“Having conducted the investigation with external counsel, we now intend to follow our usual internal processes and will take any further action that may be appropriate,” Group CEO Alexander Friedman said in a release.

The news of Haywood’s suspension sent the company’s shares down as much as 20% and overshadowed its recent announcement that it has been granted registration as a discretionary investment management and investment advisory and agency business by the Financial Services Agency in Japan.

The approval permits GAM to directly engage with institutions in Japan, such as pension funds, for the purpose of managing their assets through a discretionary investment management plan. The company has had an office in Tokyo since 1997, and already holds a securities license that permits direct marketing of its funds in Japan.

Last year, the firm lured Shizu Kishimoto away from Schroder Investment Management Japan to lead its sales and oversee business operations in the country.

“Being granted this license by the regulator is an important milestone for us,” Kishimoto said in a release. “We look forward to engaging directly with institutions, including pension funds.”

Tags: GAM, Risk Management, Tim Haywood

The World Bank will give Nigeria $4.5 billion in funding through 2021 to help the power industry, health sector, and governance projects.

The institution, which lends money to countries for economic development, has invested an estimated $10 billion in the country, and is currently funding 30 projects in it.

Hafez Ghanem, the World Bank’s new vice president for Africa, said he wants the business to finance more power sector and social protection developments, and predicts it will start $2.5 billion worth of tasks in the next 18 months.

“Non-oil tax collection in Nigeria is presently very weak and well below the levels of structural and regional peer countries,” he told Bloomberg. “Nigeria needs to increase its non-oil revenue collected at both the federal and state level across the main type of taxes; income, VAT, excises and customs, and states’ internally generated revenues.”

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

Ghanem said that this would be possible with tax reforms and an increase in compliance rates, as well as higher rates on alcohol and tobacco. He’d also like to see changes to policies regarding the oil industry, a key element of the Nigerian economy.

“The near doubling of gasoline prices on the world market since early 2016 has put pressure on a number of countries that subsidize petrol, including Nigeria,” he said. “It’s very important that as these policies are phased out, social protection measures are phased in to help those who will be hit hardest by the rise in prices.”

Nigeria’s President Muhammadu Buhari signed the country’s largest budget in June, at NGN 9.1 trillion ($25 billion). The budgets will increase infrastructure projects and economic recovery. The International Monetary Fund predicts Nigeria’s economy to grow 2.1% this year. Budget documents obtained by Bloomberg show that Nigeria’s deficit is slightly more than the budget itself, at NGN 2 trillion. The news outlet reports that the country will borrow more than half of the shortfall to help fix the issue.

In addition, Nigeria has general elections coming up in February. Buhari is eyeing reelection, and election spending is something that concerns the World Bank’s new Africa vice president, even though he thinks it will not spur the nation’s growth.

“We are concerned about potential delays in implementation of government programs due to the focus on elections,” Ghanem said. “We urge the government to remain focused on implementing the Economic Recovery and Growth Plan, which includes the power-sector recovery plan.”

The World Bank had $61.8 billion in assets under management as of December 2017.

Tags: Hafez Ghanem, Nigeria, World Bank