UPDATE 3-Pension boss Rohde to head Danish central bank

Tue Aug 21, 2012 10:09am EDT

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By John Acher and Mette Fraende

COPENHAGEN, Aug 21 (Reuters) - The Danish government has chosen the head of a major national pension fund to head the central bank, a role that currently entails deterring investors from driving up the value of the crown currency as they seek shelter from the euro crisis.

Lars Rohde, who had been widely tipped for the job, will take a big pay cut to move to the central bank from the ATP public pension fund. Many Danes invest through ATP to supplement their state-funded old-age pensions.

Rohde's mandate at the central bank is above all to preserve the exchange-rate peg to the euro that the Danish authorities imposed on the crown in 1999.

"I hope ... first and foremost to be a competent central bank chief, because the Nationalbank in Denmark but also central banks in other lands are now facing a debt crisis and low economic growth ... in our nearby region," Rohde told TV2 News.

The Danish bank introduced a negative interest rate for the first time last month in its latest attempt to cool the crown, reining it in to levels around 7.4465 per euro, well within the range set for it.

Danske Bank said in a note to clients that investors should welcome Rohde because of his deep knowledge of the markets and he is not a "dusty academic from the central administration."

"He is not unknown in the international financial world, though not perhaps known in central bank circles," said emeritus professor Niels Thygesen. "He is an excellent manager clearly."

Rohde will succeed retiring Governor Nils Bernstein as head of the Nationalbank's three-member board of governors on Feb. 1, the prime minister's office said in a statement.

He told TV2 his main challenges are those set down in the law - "to secure an appropriate monetary system and make sure that credit is available to all who are credit-worthy."

Denmark belongs to the European Union and the central bank runs its monetary policy to keep the crown at between 7.29252 and 7.62824 per euro, though in practice the bank keeps an even tighter range. Before the euro's launch, Denmark pegged the crown to the German mark.

The currency peg gives the central bank less influence over the economy than banks such as the euro zone's European Central Bank, which target inflation and run a free-floating currency.

"What is decisive for the Nationalbank is to maintain its monetary policy and thereby its peg to the euro, and that will be unchallenged even with a change of central bank chief," Business and Growth Minister Ole Sohn said on TV2 News.

Rohde, who is 58, said he was willing to serve for the next 12 years - when, at 70, the law would require him to retire.

MANAGING THE CROWN'S APPEAL

The central bank has been intervening on the currency markets and slashing interest rates to fend off those seeking out non-euro assets. Such investors have been particularly attracted by the high credit ratings of Danish government bonds.

The bank has cut interest rates three times this year, taking its secondary certificates of deposit (CD) rate to minus 0.20 percent. Such measures have cooled the crown, which has weakened from around 7.43 to the euro in early June.

Business minister Sohn said Rohde's task would include keeping policy on track to ensure that Denmark continues to enjoy international recognition in capital markets and remains an attractive country for international investors.

Rohde, familiar to many Danes from television appearances as head of their pension fund, has been chief executive of ATP since 1998. He has led ATP - with assets of 754 billion Danish crowns ($125 billion) - through the crisis relatively unscathed.

The ATP Group had a profit of 4.0 billion crowns in 2011, a year of plunging equity markets and record-low interest rates.

"With his background, he will be very competent to carry out the task at the central bank," Danske bank's chief economist Steen Bocian said.

Rohde worked as an economist at the Nationalbank in 1982-1985 before becoming head of a doctors' pension fund in 1985 and holding executive positions at mortgage bank Realkredit between 1989 and 1998.

Departing governor Bernstein, who has led the central bank since 2005, is stepping down because he will reach the pension age of 70 in January. ($1 = 6.0332 Danish crowns) (Additional reporting by Teis Jensen, Copenhagen newsroom; Editing by Ruth Pitchford)

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