SWF Radar LegislationAndRegulation

Michael Fischer, a partner at Reed Smith in Germany, has written a backgrounder (subscription required) on the changes that are being made to the German law on foreign trade to address the issues raised by sovereign wealth fund investment.

Thomson Reuters reports that, “Sovereign funds wanting to buy shares in Italian companies should ‘generally’ stay below 5 percent, Italian Foreign Minister Franco Frattini told newspaper Il Messaggero in an interview published on Monday.”

Foreign Policy Passport discusses the Fed’s move on Monday to make it easier for a wide array of entities, including foreign governments, to take larger stakes in US banks.

The Deal writes that, “German business doesn’t want it, the European Union is highly suspicious of it and the City of London hopes for a lucrative windfall. But Germany’s government has pressed ahead with it anyway.”

Thomson Reuters reports that, “Brazilian Finance Minister Guido Mantega said on Wednesday hedge funds were responsible in part for the current global turmoil and should be regulated, but that wealth funds were more transparent.”

Thomson Reuters reports that, “Restrictions by the United States and others may lead sovereign wealth funds to invest closer to home instead of in the West, the head of the central bank for the United Arab Emirates [Sultan Nasser al-Suweidi] was quoted as saying on Thursday.”

The WSJ’s Deal Journal blog writes that, “China is creating a merger law to protect its national security-setting up a review process similar to the Committee on Foreign Investment in the U.S., or CFIUS.”

Thomson Reuters reports that, “Germany’s cabinet agreed on Wednesday to bring in rules to protect domestic firms from foreign buyers, notably sovereign wealth funds (SWFs), who could exert political influence, a German government official said.”

The Telegraph writes that, “Germany’s cabinet is expected to approve a far-reaching new law this week to stop ‘giant locust funds’ from Russia, China and the Middle East from launching takeover raids on the country’s prized industries.”

The article adds that, “Stephen Jen, currency chief at Morgan Stanley, said Britain’s open-door policy means that the City would be the chief beneficiary of the German plan. ‘The funds can use operations listed in London,’ he said.”

Thomson Financial reports that, “Russian billionaire Alexander Lebedev, who is seeking to buy tour operator Oeger Tours, has warned Germany against investments by Russian sovereign wealth funds because of corruption he says exists in the country’s bureaucracy. In an interview with Welt am Sonntag, Lebedev also expressed sympathy with the German government’s aim to control investments by sovereign wealth funds in industries that affect its national security.”