Deka Bank’s new chief executive has promised to invest another €500m if needed to support its troubled real estate fund caught in the middle of a fraud investigation, after the resignation of the former CEO on Thursday night.

Fritz Oelrich, a main board member at Deka and the man temporarily parachuted in as the bank's chief executive after Axel Weber stepped down, on Friday said he would keep the €6bn real estate fund open.

Speaking at Deka’s annual news conference on Friday, Oelrich ruled out any closing of the German real estate fund despite continued outflows of between €4m and €7m per day from investors worried about the alleged fraud at the heart of the unit.

“Our commitment to the German real estate fund is boundless. We have set no limit for the outflows for the fund. It will stay open”, Oelrich said, adding that Deka could muster another €500m to maintain the fund’s liquidity if needed. The mutual fund has €6bn in assets, following total outflows of €2.7bn for 2004.

This policy immediately reverses the strategy of Weber, who had admitted the fund could be closed as it faced massive outflows.

Axel Weber stepped down as Deka CEO at the behest of the asset manager’s supervisory board, which had met earlier on Thursday. The move came as a surprise to many in Frankfurt, as Weber had managed to keep his job for six months since the scandal at Deka first erupted.

Last August, Deka fired Michael Koch, an executive at real estate fund arm Deka Immobilien Investment for allegedly accepting a bribe. A month later, a Deka fund investing in German real estate had to be given a capital injection to stay afloat after suffering €1.2bn in investor outflows in the first nine months of 2004.

Deka also threw out the entire management board of Deka Immobilien Investment after it emerged that it had lied about the true value of Deka’s investments in German real estate.

Oelrich said that while investigations into the corruption of Deka Immobilien Investment’s former management continued, “there is no evidence that other Deka management or staff have done anything wrong.”

He added that the new management of Deka Immobilien Investment would be in place by the middle of 2005 so that the business could again run at full strength.

Separately, Deka said outflows from its German institutional funds, known as Spezialfonds, totalled €1.3bn in 2004. It said the outflows were partly due to the creation of master funds, where Deka no longer handles portfolio management but only back-office administration.
As a result, Deka’s institutional assets under management stood at €43.9bn at the end of 2004, down from €45.2bn a year earlier.