BANKERS PREDICT SHAKEOUT IN SWEDISH BANKING SYSTEM
The central bank recommended a major
change in the traditional ownership structure of Swedish
commercial banks that bankers said would inevitably lead to the
takeover of remaining small regional banks.
    The recommendation was prompted by a recent proposal by the
<Proventus> financial group to create a new holding company
that will control the third-largest commercial bank <Gotabanken
and Wermlandsbanken>, a small regional bank.
    The central bank gave its approval and said financial
groups should be allowed to have banking subsidiaries as long
as the groups did not include industrial or trading companies.
    The central bank was commenting on a proposed new bill
governing Swedish financial groups.
    It recommended that insurance companies should not be
allowed to own banks until a separate inquiry into the problem
was completed. Sweden's two biggest insurance companies have
both said they would like to enter the banking business.
    Sweden's commercial banks on the other hand have long
wanted to buy up insurance companies.
    Bankers said the recommendations would mainly bring the
rules up to date with new circumstances created by the
extensive de-regulation of the Swedish financial markets since
1982.
    Bankers said it was clear that others would follow the
Proventus example and that this would lead to a shake-up in the
banking system with the remaining small regional banks being
absorbed by larger banking groups.
    The central bank also recommended banks be allowed to
operate their stockbroking departments as subsidiaries, which
bankers said would lead to banks taking over small stockbroking
firms. Banks have long complained the ban on splitting off the
broking departments forced them to operate at a disadvantage
because they could not match the partnerships and large
salaries stockbrokers could offer their staff.
 REUTER
