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. Last Updated: 07/27/2016

Investors Assured by Deutsche

LONDON -- Investors who have stuck by three stricken Morgan Grenfell investment funds were on Wednesday given the full backing of Morgan Grenfell's owners, German banking heavyweight Deutsche Bank AG.


Deutsche's backing pledge came as Britain's investments watchdog investigating irregularities in the funds, temporarily suspended from trading last week, warned the inquiry into what went wrong and whether compensation is due will take some time.


"Judging by past experience, this type of investigation takes months rather than weeks," Judy Delaforce of the Investment Management Regulatory Organization said.


Morgan Grenfell Asset Management said that if necessary Deutsche, its ultimate parent, would buy units in the two unit trusts and shares in the investment fund currently under the microscope of forensic accountants.


It will provide this support for a minimum of three months to ensure the smooth running of the funds.


The latest commitment was approved by IMRO, and Delaforce said the watchdog was happy with the present makeup of the funds, which were suspended because of suspected misvaluations of certain unlisted stocks.


"We are satisfied that all stocks with any slight question mark over them have been removed from the portfolio as part of the ?180 million [$280 million] injection that was made by Deutsche Bank," Delaforce said.


Earlier, Morgan Grenfell spokesman James Murray said Wednesday's commitment was in addition to cash balances in the funds.


Last week these stood at ?300 million, following the ?180 million cash injection by Deutsche. But these balances are funding investor redemptions, which late Tuesday reached ?256 million since trading resumed last Thursday morning.


Murray said the rate of redemptions in the MG European Growth Trust, the MG Europa Fund and the Morgan Grenfell International Funds' MG European Capital Growth Fund had slowed significantly, and there was currently sufficient cash in each.