The National Pension Reserve Fund (NPRF) has terminated the mandate held by State Street Global Advisors (SSGA) to manage €650 million worth of equities for it, following a fine that was recently levied on State Street in Britain in the wake of an overcharging scandal involving its British unit.

A spokesman for the NPRF confirmed last night that it axed SSGA on Monday, following a meeting that took place of the commission that oversees the NPRF.

The move followed the publication last Friday of a report by the UK's Financial Conduct Authority (FCA) into failings at State Street's transition management business.

The FCA fined State Street £22.9 million in relation to the overcharging of six clients, including the National Treasury Management Agency, for whom the NPRF manages assets. State Street had already paid back about €3.2 million to the NTMA following the discovery of overcharging going back to 2010.

In a statement last Friday following the publication of the FCA’s decision to fine State Street, the NTMA noted: “The FCA is very critical of State Street UK and states that its transition management business deliberately overcharged six clients”, of which it was one.

'Unauthorised commissions'
Last September, the NTMA described the overcharging as having involved "the application of unauthorised commissions to NPRF trades in a manner that was never visible to the NTMA".

It said the overcharging reduced the sales proceeds of a number of trades by 0.07 per cent. The trades had taken place as part of a €4.7 billion programme of disposals.

The NPRF had suspended State Street’s British unit from its panel of transition managers in October of 2011, after it queried the departure from State Street of two of its executives.

A subsequent review uncovered that the NPRF had been overcharged.

The FCA last week said State Street’s British unit had shown a “complete disregard for its customers” by charging some of them hidden margins.

As well as the NTMA, overcharged clients included the Royal Mail pension fund, the Kuwait Investment Authority and the pension fund of supermarket chain Sainsbury's.

State Street employs more than 2,000 staff in Ireland, and is headquartered in Dublin in the docklands area of the city.

The Irish-based SSGA unit, which was not involved in the overcharging, declined to comment last night.