Deka says institutional funds still healthy

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GERMANY - Deka Bank has confirmed that one of its mutual funds investing in real estate suffered outflows totalling 1.2 billion euros in the first eight months of 2004, but said its institutional funds investing in the asset class remained healthy during the period.

A spokesman for Deka said the outflows from the mutual fund, which invests exclusively in German real estate objects, had to do with the depressed state of that industry.

He dismissed the possibility that the outflows were linked to the recent firing of Michael Koch, a former executive at Deka in charge of real estate funds for institutional investors.

Koch was fired on 31 August after allegedly accepting a bribe in return for not bidding for a real estate object in Frankfurt. He is currently under investigation by Frankfurt’s public prosecutor.

Officials from Deka’s shareholders, which are Germany’s publicly-owned savings banks (Sparkassen) and Landesbanken, are to meet next week to discuss injecting enough money into the battered mutual fund to keep it liquid. If they do not agree, the fund could be closed.

Meanwhile, the spokesman said Deka’s real estate funds for institutional investors held up well in the first eight months of the year despite the difficulties in the German real estate industry. He said the seven funds took in 29 million euros to bring total volume to 860 million euros.

Deka’s three other mutual funds, including the battered one, have generated a volume of around 18 billion euros.

According to German news reports, Deka’s recent troubles have led its shareholders to harbour doubts about Axel Weber, Deka’s chief executive. One official was quoted as saying: “People are wondering whether Mr Weber is the right man for times which are becoming more difficult.”

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