Allianz sets aside another 1.9 billion euros over fund debacle

GERMANY’S Allianz said on Wednesday (May 11) it would set aside another 1.9 billion euros (S$2.8 billion) as it braces for the outcome of US regulatory investigations into a multibillion-dollar trading debacle at its funds arm.

Allianz said the provision hit its first-quarter net profit, which was 600 million euros, less than the 1.9 billion euros analysts had expected.

The provision comes on top of 3.7 billion euros the company set aside in February to cover litigation and US regulatory investigations into the funds’ demise.

The collapse of a US$15 billion set of investment funds during the pandemic market turmoil in early 2020 has cast a shadow over Germany’s most valuable financial firm and one of the world’s largest asset managers.

The demise of the funds has been under investigation by the US Justice Department and the Securities and Exchange Commission, Allianz has disclosed, as well as the subject of numerous investor lawsuits.

Allianz said the additional provision should cover the remaining costs it could incur.

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“This provision booked is a fair estimate of its remaining financial exposure in relation to compensation payments to investors and to payments under any resolution of the governmental proceedings,” Allianz said.