First closed pension fund founded

RIGA - The telephone company Lattelekom founded the first closed pension fund in Latvia and signed a cooperation agreement with Hansabanka and Suprema Aug. 3.

According to the agreement, Hansabanka will provide custody services while Suprema will be the fund's asset manager.

"This is an important event for Latvia's securities market and economy overall," said Anri Leima-nis, the pension fund's board chairman. "With the appearance of the first closed pension fund, Latvia gets a new investor that will be more conservative and will make long-term investments."

The new pension fund has been entered into the companies' register July 14, but it has still to obtain a license from the insurance supervision inspectorate to make its first investments. Two open pension funds already operate in Latvia.

Lattelekom has been making reserves for the pension fund for its employees since 1995, and the fund's capital now amounts to 4 million lats ($6.78 million).

Hansabanka board member Druvis Murmanis predicted that the creation of such a pension fund will give a boost to Latvia's securities market.

"The development of Latvia's securities market should follow because traditionally pension funds are one of the largest investors in securities," he said.