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Allianz’s Faber critical of investment banks

GLOBAL – Joachim Faber, chief executive of Allianz Global Investors, has hit out at investment banks targeting pension fund trustees.

“I think that’s horrible,” he told IPE in response to a question about investment banks putting ever more complex solutions to trustees. The banks’ short-term approach was “the worst thing that can happen”.

Speaking at the London headquarters of sister firm Dresdner Kleinwort Wasserstein, Faber stressed that AGI is a long-term player and that it aims to integrate derivatives and exotics within its mainstream fund management operation.

Faber is the latest asset management figure to round on investment banks. They came under fire at the National Association of Pension Funds conference in Edinburgh recently.

Faber also made clear that the division was not going to participate in the current wave of acquisitions in the asset management industry.

“We are not acquiring. No way,” he said. “No major acquisition at all is planned.”

The past year has seen Legg Mason take on Citigroup’s asset management business and Merrill Lynch Investment Managers go to BlackRock.

Faber said AGI’s structure, with separate units such as bond specialist PIMCO and value equity house NFJ was sound. Any expansion would come from emerging markets such as India and the US baby-boomer market.

Speaking at a presentation to announce €65bn in total inflows and €1.12bn in operating profits in 2005, Faber said: “I think it’s a good model.”

He also said there was “much further” to go with fixed income assets, driven by accounting and regulatory changes that affect investors. He said: “We will have tremendous growth in the area going forward.” PIMCO’s Total Return Fund now has $91bn in assets.

Allianz Global Investors’ assets under management grew to €942m at the end of 2005. A highlight was NFJ doubling its assets in the year to $20bn (it had $2bn in 2002).

Elsewhere, Morgan Stanley said its asset management group’s assets under management have risen $15bn, or 4% to $442bn. Institutional assets rose $15bn during the first quarter. Pre-tax income at the unit slipped 40% to $172m.

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