EU hedgie bill to cost 2.9bn
EUROPEAN UNION plans to crack down on hedge funds and private equity houses could cost the industries as much as €3.2bn (£2.9bn), according to the first official report into the directive.
The study, conducted by Charles River Associates for City watchdog the FSA, also said the affected firms would be hit with annual costs of around €311m.
The EU is planning to force fund managers to sign up to a costly registration and disclosure regime, and to adhere to caps on leverage.
“These one-off costs are very significant and we do not think they can be justified,” said FSA asset management sector head Dan Waters.
Hedge funds would bear the brunt, paying €1.4bn in one-off costs to comply with the directive.
Private equity firms face one-off costs of up to €756m, but they would bear the largest ongoing costs, totalling €248m a year, the study found.
And the report said that pension funds would be £1bn a year worse-off under the EU proposals.
Richard Lambert, head of employers’ association the CBI, welcomed the report, saying the directive “could reduce investment returns, making it harder for people to pay for retirement”.
City PM was the first newspaper to launch a campaign against the EU directive back in April.Since then, a number of City figures have spoken out against the proposals.