NPS withdraws money from Goldman

By Lee Hyo-sik

The National Pension Fund (NPS), Korea’s state pension operator, has withdrawn all the funds it trusted to Goldman Sachs for management.

The move appears to be retaliation against the world’s largest investment bank for its decision to pull its asset management unit out of the country.

The NPS, the world’s fourth largest pension fund with 368 trillion won ($341 billion) in assets, said Thursday that it has retrieved all of its funds managed by Goldman Sachs Asset Management, following it decision on Nov. 13 to exit the local asset management market.

The controversial U.S. investment bank’s decision reportedly angered NPS Chairman Jun Kwang-woo, who heard of it while in New York, and canceled his luncheon meeting with high-ranking Goldman Sachs officials the following day.

''We decided to nullify a fund management contract with Goldman Sachs Asset Management right after it announced the plan to close its doors early next year. Foreign asset managers must operate a local office to manage our funds,’’ said an NPS official who declined to be named. Goldman Sachs invested in bonds issued by the Korean government and domestic companies on behalf of the NPS.

''We cannot disclose the amount of money involved with Goldman Sachs in accordance with our internal rules. All the retrieved money has been reassigned to other asset management firms,’’ he said. But the NPS has not yet retrieved its funds invested in overseas bonds by Goldman Sachs.

When asked about whether Jun was upset with the U.S. investment bank, he declined to comment, only saying he is not in a position to discuss such matters.

In response to the NPS move, Goldman Sachs said there is nothing it can do about it.

''It is totally up to institutional investors how to manage their funds. Money comes and goes,’’ a Goldman Sachs spokesman said.

In an apparent bid to appease the NPS, Vice Chairman of Goldman Sachs Michael Evans visited the pension fund’s headquarters in Seoul Wednesday to explain its decision to shut down its asset management firm here. Evans also reportedly promised to expand its investment banking business here and hire more workers.

Goldman Sachs Asset Management said earlier that it decided to pull out of Korea after failing to make profits in the increasingly competitive marketplace.

In 2011, it posted an operating loss of 7.2 billion won. Since the company entered the Korean market in October 2007 after taking over Macquarie-IMM Investment Management, it has failed to generate profits. In 2008, it lost 9.4 billion won in the aftermath of the international financial market turmoil sparked by the collapse of Lehman Brothers.

Goldman Sachs Asset Management has about 40 employees, some of whom will move to Goldman Sachs asset management units in Hong Kong and Singapore. Some of them are also expected to work at Goldman Sachs Investment and Securities and other of the firm’s units here.