EUROPE - Deutsche Bank’s DWS has bucked the trend and kept an asset-backed securities (ABS) fund open as shockwaves from the US sub-prime loan crisis began to die down in Europe on Monday and central bank intervention soothed financial market woes.

To avoid a sharp increase in short-term lending rates and maintain liquidity, the European Central Bank on Monday provided a further €47.7bn to banks at an interest rate at just above 4%. This move followed earlier ECB injections of €94.8bn and €61bn at around the 4% level on Thursday and Friday, respectively.

ECB interventions had the desired effect as short-term lending rates, which began racing toward 5% last Thursday, retreated to a little above 4% and European equity markets recovered on Monday to see the German blue-chip Dax up almost 1% in mid-day trading and the Euro-Stoxx-50 index up near 1.4%.

And while other European investment houses were forced to close access to their ABS funds and prevent monies from being withdrawn during the crisis, German asset manager DWS said it was keeping its €2.1bn ABS vehicle open to investment.

“We’d like to send a signal to the market that we’re not going to panic amid the liquidity crisis,” a DWS spokesman told IPE.

That said, the spokesman said investors in the ABS fund could redeem their shares but would have to do so at 2.6% under the current net asset value of the fund’s shares.

“The fact is we’ve also had €900m in outflows since the liquidity crisis began, but we’re confident that sensible investors will stay in the fund,” he added.

Primarily targeted at institutional investors, DWS’ ABS fund is not exposed to the US sub-prime loan sector and has an investment grade rating (AA-).

DWS’ move follows an announcement in Paris on Friday stating French bank BNP Paribas was closing its three ABS funds following outflows totalling €400m in the past two weeks. These outflows whittled the funds’ assets down to €1.6bn.

Like the other European fund managers before it, BNP Paribas said the decision to close the ABS fund temporarily was motivated by the need to protect its investors and its inability to price the existing assets.

Shockwaves from the US sub-prime crisis have so far prompted temporary ABS fund closures by France’s AXA Investment Managers, HSBC’s German fund arm as well as Frankfurt-based managers Frankfurt-Trust and Union Investment.