Norway's central bank seeks to keep management of $1 trillion wealth fund

OSLO - 26 October 2017: Norway's $1-trillion sovereign wealth fund should remain as a unit of the Norwegian central bank, the board of the central bank said on Thursday, unless the fund is to invest in more unlisted assets in which case a split could be considered.

In June, a government-appointed commission recommended the fund should be run by a new state investment company to alleviate pressure on the central bank and allow the two to be managed independently.

Critics of the proposed split have argued that the fund's risk profile is kept in check by a conservative culture at the central bank and that more independence could ultimately jeopardise the nation's savings.

"Norges Bank is well equipped to manage the GPFG (fund) and perform central banking task also going forward," the board of the central bank said in a letter to the finance ministry published on Thursday.

Still, the board added, a closer examination of aspects of the current organisation and governance model could be required.

"If the investment strategy comes to include more unlisted asset classes and the manager is given broader responsibility for investment strategy and ethical assessments, this could count in favour of the management of the fund being organised outside the central bank," the board said.

The world's largest sovereign wealth fund was built with income from Norway's offshore oil and gas industry and now corresponds to about 2.5 times the country's annual gross domestic product.

At the end of the second quarter, the fund had invested 65.1 percent of its value in stocks, 32.4 percent in bonds and 2.5 percent in unlisted real estate.