Dutch company APG stops lending bank stocks

Fri Sep 19, 2008 1:15pm BST
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LONDON (Reuters) - APG, the 230 billion euro (181.3 billion pound) Dutch pension scheme, said on Friday it had stopped lending securities of European and U.S. banks facing "downward pressure" on their stock prices.

A spokesman for the scheme, which covers the Dutch civil service and construction industry, said APG had stopped lending shares of a number of banks, but is still lending shares of other companies.

He declined to give the number of banks affected or their names.

The move comes amid a clampdown on the short-selling of banks, which has been blamed for helping drive down share prices to put several firms in danger of collapse. Britain's financial watchdog imposed a ban on short-selling bank stocks.

Short-selling sees an investor sell borrowed stock in the anticipation the price will fall, allowing the stock to be bought back more cheaply.

APG said its decision was made this week but did not clarify whether it had come before similar moves in the United States on Thursday.

The Netherlands' second-largest pension fund, the 86 billion euro Zorg en Weltzijn, said on Friday it would continue securities lending.

"We continue with securities lending mainly for the reason that it would have a disturbing effect in the market if we stopped," a spokesman said.

"It (securities lending) provides liquidity in the market and it works as a lubricating grease. We monitor the situation carefully."  Continued...

 
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