This is the first external investment manager that will manage part of the Bank of Lithuania's financial assets as well as provide advice on investment and related audit, IT, accounting, legal and other issues, the Bank of Lithuania reports.
"We have chosen to cooperate with the World Bank because of the highest credibility of this supranational institution that contributes to setting the highest market standards and the best investment management practice. By invoking the World Bank's experience and knowledge, the Bank of Lithuania is expanding its geographic asset allocation and further diversifies risk," says Member of the Board of the Bank of Lithuania Tomas Garbaravicius.
Due to the external management mandate with the World Bank, the Bank of Lithuania's investment is going to include Canada, UK and US bonds. All these investments will be done on a currency hedged basis.
The financial assets portfolio under the external management will remain under the ownership of the Bank of Lithuania; furthermore, the World Bank will provide regular reports to the Bank of Lithuania on transactions and holdings of the portfolio.
The World Bank will only manage a small share of the Bank of Lithuania's financial assets. According to the data for the first half of 2015, the amount managed under this mandate would amount to some 7% of the Bank of Lithuania's financial assets not related to monetary policy operations.
External investment managers are usually invoked when an investor, having assessed the expected benefits and related costs in its decision to expose to a certain investment, finds cooperation with an external manager plausible. About 50 central banks globally have signed an Advisory and Investment Management Agreement with the World Bank.
