Abbey National and Bank of America close PFI teams, leaving the sector open to pension fund investment
Major banks are pulling out of PFI funding and consultancy, leaving accountancy firms and pension funds to fill the vacuum.

Bank of America has shut down its PFI team and Abbey National recently announced that it has put its interests in the sector up for sale.

More banks are expected to follow suit, as the typical 25-year length of a PFI contract is at odds with their aim of making profit in the short term.

Tim Treharne, previously managing director of Bank of America's project finance unit, joined accountant KPMG in April as a director of its financing team, which advises on PFIs and public–private partnerships. He said: "People have strategically decided they do not want to be in that area. Bank of America and Abbey National have pulled out, as have others."

KPMG international chairman of PPP advisory services Tim Stone said that with fewer banks giving financial backing to PFIs and PPPs, pension funds should step in and replace them. He said: "Banks tend to be focused mainly on the short to medium term. We hope to see pension funds come through, because they are the natural long-term funders. It is much more of a natural fit."

KPMG has poached two of Bank of America's key PFI players. Treharne, who has worked mainly on transport projects, spent nine years at the bank prior to moving to KPMG.

His role at the accountant is to bring in more business from the private sector and exploit opportunities overseas. He said: "I will be looking carefully at where PPP is becoming more real. There are a lot of discussions [about private finance] in countries where you wouldn't expect them. Even France has passed a law enabling it to do PPPs. My remit will be worldwide, but I will focus on developed countries, working with local KPMG offices."

The second Bank of America employee to go to KPMG is Peter O'Flynn, who joins as associate director.

The KPMG financing team now has more than 130 people in it, including 10 partners; 70% of its work is for public sector clients. PPP chairman Stone said: "It must be the largest independent debt advisory team in Europe."