HOUSTON — WestLB AG has decided to pull the plug on its Houston-based WestAM fixed-income business, several months after the German-based company agreed to form a joint asset management venture with Mellon Financial Corp.
WestLB will wind down the Houston operation, which accounts for roughly $6 billion of the $82 billion in assets that WestAM manages worldwide, by the end of the month. At that time, it will shut down WestAM's "broad market" fixed-income strategies and return the money to clients, confirmed WestLB spokeswoman Connie Kain.
WestAM's Chicago-based private equity and New York-based structured products operations will not be affected. Its investment offices in Europe, Asia and Australia will remain intact as well.
The Houston group is the former Criterion Investment Management Co. WestLB acquired the Criterion operation from its then-owner, Nicholas-Applegate Capital Management, in 1999.
WestAM's broad market strategies in the Houston office are core, core-plus, high-quality core, short-intermediate, intermediate and long-duration strategies.
WestLB officials decided the strategies would not be part of the London-based joint venture with Mellon — WestLB Mellon Asset Management — which was officially hatched in December, according to Ms. Kain.
"The funds did not fit into the overall strategy going forward," Ms. Kain said, noting WestLB officials believed the fixed-income unit did not have the scale necessary to be competitive.
WestLB executives explored the possibility of selling the unit, but decided shuttering the business would be in the best long-term interest of both employees and clients, Ms. Kain added. Sources said the firm turned down purchase offers.