May 29 (Bloomberg) -- Macquarie Bank Ltd., Australia's biggest securities firm, dismissed criticism from hedge fund manager Jim Chanos, saying the company could withstand a 40 percent decline in financial markets.

``I think that our track record will continue to stand us in good stead through a whole range of market conditions,'' Chief Executive Officer Allan Moss said at a lunch in Sydney today.

The bank has delivered a decade and a half of record annual profit by acquiring assets and bundling them into funds it manages for a fee. Shares of Macquarie, which gained 36 percent in the past year, declined 4.3 percent since Chanos told investors in New York on May 23 the bank has ``an inherently unstable platform.''

Chanos, who predicted the collapse of Enron Corp., said the Sydney-based bank's shares will fall and that he had a short position on the bank. Short sellers sell borrowed shares in the hopes of buying them later at a lower price and profiting.

While the bank's infrastructure, real estate and merger advisory businesses would be affected if financial markets declined and caused asset prices to fall, the company would cope, Moss said. ``We have experience of these assets through very challenging times,'' he said.

Chanos said buying assets at high prices and transferring them into entities funded by other investors will only work for Macquarie while credit is cheap and assets are increasing in value.

Moss, 57, said that Macquarie, which scours the globe for assets with steady cash flows such as toll roads, pays ``appropriate'' prices when it makes acquisitions.

`Repeat Business'

``I don't think there is much concern about the sustainability of the model by informed investors,'' Moss said. ``It's mainly repeat business in our funds.''

The bank raised A$21.6 billion for its investment funds in the year ended March 31.

It posted a 60 percent rise in annual profit to A$1.46 billion for the same 12 month period, buoyed by asset sales and fees.

Income from asset sales and equity investments jumped more than fourfold to A$1.4 billion. The bank sold two-thirds of its holding in U.K.-based Thames Water, its luggage trolley business Smart Carte Corp. and Stagecoach Group Plc's London bus operation into funds it manages.

Macquarie's shares rose A$1.50, or 1.7 percent, to A$89.18 at the 4:10 p.m. close of trade in Sydney today.

Last Updated: May 29, 2007 03:48 EDT