GERMAN BANKS SAY COMPANY HOLDINGS FALLING
West German private banks, in the
latest twist in a long-running battle over the size of their
holdings in industry, have said the holdings were falling and
rejected calls for tighter limits on these participations.
    Under West Germany's banking system, banks can hold shares
in non-banking companies giving them seats on company
supervisory boards, and administer the holdings of small
shareholders in safe custody accounts.
    Holdings of over 25 pct, which give a veto right in the
supervisory board of a company, must be disclosed.
    "The claim that the concentration of power has intensified,
as made by the Monopolies Commission, therefore turns out not
to be accurate ... There is no reason to impose further legal
restrictions on the acquisition of holdings by banks," it said.
    The Association's letter is the latest skirmish in a long
running battle between banks on the one hand and a range of
government offices and political lobbies on the left and right.
    The number of holdings above 10 pct in public companies
with a nominal share capital of over one mln marks held by
these 10 banks fell to 86 in 1986 from 129 in 1976, it said.
    Of these 43 reductions, 41 represented holdings of over 25
pct in 1976. The banks' holdings of nominal share capital fell
to 1.70 billion marks in 1986, or 1.34 billion adjusted for
capital changes in the past 10 years from 1.80 billion in 1976.
    Over this period total West German nominal share capital
rose to 235 billion marks from 136 billion, so that the holding
of banks in German companies fell to 0.7 pct from 1.3 pct.
    The nominal share capital of listed non-bank companies rose
to an estimated 49 billion marks in 1986 from 35.58 billion in
1976, with banks' holdings falling to 1.57 billion marks or 3.2
pct from 1.61 billion marks or 4.5 pct, the Association said.
    It argued that bank representatives were in a minority on
the supervisory boards of the 100 biggest German companies, and
in most cases could be blocked by non-banking representatives.
    The survey covered Deutsche Bank AG <DBKG.F>, Dresdner Bank
AG <DRSD.F>, Commerzbank AG <CBKG.F>, Bayerische Vereinsbank AG
<BVMG.F> and Bayerische Hypotheken- und Wechsel-Bank AG
<BHWG.F>.
    It also covered Berliner Handels- und Frankfurter Bank
<BHFG.F>, <Berliner Bank AG>, <Industriekreditbank AG>,
Vereins- und Westbank AG <VHBG.F> and <Baden-Wuerttembergische
Bank AG>.
    Deutsche holds by far the largest number of such stakes,
including 28.5 pct of Daimler-Benz AG <DAIG.F>.
    Criticism of the bank holdings has not only come from the
Monopolies Commission and left-wing parties. An advisory
commission, in a report late last year to the Economics
Ministry, urged implementation of the five pct proposed by the
Monopolies Commission to promote competition and avoid interest
conflicts.
    The Economics Ministry has been controlled by the liberal
Free Democrat Party, junior partner in the centre-right
coalition government and increasingly in favour of
deregulation.
    Furthermore the West German Supreme Court recently
supported an action by a private Deutsche shareholder demanding
more transparency in the bank's balance sheet.
    The shareholder argued that the bank's ability to declare
industrial stakes of more than 25 pct as only temporary
holdings evaded the statutory requirement to report them in
full. If a bank declares stakes temporary it does not have to
disclose them but can include them under securities holdings.
    The case is due to be heard again by the Frankfurt higher
regional court.
 REUTER
