GERMAN SECURITIES MAY BE COUNTED IN LENDING RATIOS
West German banking authorities are
considering requiring German banks to bring securities holdings
into lending ratio calculations used to regulate credit risk,
banking sources said.
    The present interpretation of the credit law limits banks'
maximum lending to 18 times eligible capital -- reserves plus
equity capital -- but sets no restraints on securities
holdings.
    Under new provisions, weightings would be attached to
securities similar to those used for lending. Weightings would
range from a zero rating for no-risk assets to 100 pct of total
asset value for what authorities consider the highest risk.
    Low-risk securities carrying a zero rating would include
public authority bonds for the federal government, states and
municipalities, the sources said.
    A 20 pct rating would be assigned to issues of domestic
banks. Secured bonds of mortgage, shipping and public authority
banks would be an exception to this, via such securities as
mortgage and municipal bonds.
    Securities issued by foreign banks would attract a
weighting of 50 pct, while authorities are considering
requiring banks to include 100 pct of the value of debt assets
of foreign issuers, including sovereign borrowers.
    The sources said the revision is still being discussed, and
required approval by the federal Banking Supervisory Office in
West Berlin, the Bundesbank, and West Germany's four banking
associations.
    The move is a response to the increasing securitisation of
debt markets, they added.
 Reuter
