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IPE special report May 2018

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Metzler sees AuM rise 50%

GERMANY - Metzler, the German private bank, has reported a huge jump in assets under management (AuM) for 2006 due in large part to continued strong demand for German master funds.

At the end of 2006, Metzler's AuM totalled €30bn - an increase of 50% from €20bn one year earlier.

"The biggest business increase was seen in the master fund segment," said Friedrich von Metzler, chief executive of the eponymous private bank. He was speaking at the bank's annual news conference today in Frankfurt.

German master funds permit institutional investors to centralise back-office administration of funds - for example reporting and risk monitoring. Claimed benefits are greater transparency and reduced cost.

Of the €32bn in Metzler's current AuM, €20bn is invested in master funds. Beyond that, Metzler actively manages €9bn on behalf of institutional clients, including pension funds, while the remaining €3bn is retail money.

Last year's strong performance of Metzler's master funds reflects positively on Joachim Treppner, head of that business. Metzler recruited Treppner from JP Morgan last November 1 after the US bank earlier closed its master fund business in Frankfurt.

Turning to pensions management, Metzler said assets from this core business were €1.2bn, with €550m coming from so-called contractual trust arrangements (CTAs). CTAs are a German equivalent of external corporate pension funds.

But contributions to its pensions business fell far short of a prediction given by the bank during last year's news conference. The contributions totalled just €115m, far below the prediction of €250m.

Said von Metzler: "What we're dealing with here are (pension) savings that over a long period will grow dynamically. We expect further grown in the coming years."

At last year's news conference, Metzler said it managed pensions for 184 corporate clients, including consumer chemical group Henkel, Deutsche Börse, Citibank, Swiss food group Nestlé and VBL, a €10bn pension fund for German public sector employees.

New corporate clients named at today's conference included media giant Bertelsmann, the international accountant KPMG and US bank Merrill Lynch, for whom Metzler is managing so-called "overtime accounts".

The accounts enable employees to save, on a tax-deferred basis, the monetary equivalent of overtime hours, unused holiday, cash bonuses or part of salary to finance retirement or time off work.

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