Bank fuer Gemeinwirtschaft AG's&lt;BKFG.F> (BfG) partial operating profits in the first four
months of this year were lower than in the same period in 1986,
management board chairman Thomas Wegscheider said.
    But the balance sheet total at the end of May was four pct
higher than one year earlier as savings continued to flow into
the bank, he told the annual press conference.
    BfG parent bank partial operating profits halved to 166 mln
marks in 1986 from 311 mln in 1985, with the balance sheet
falling to 48.80 billion marks from 49.02 billion.
    Wegscheider declined to give a forecast for the full year,
and noted that the first four months of this year were not
comparable with the 1986 period as first quarter 1986 had been
extremely successful for the bank.
    The general banking environment this year was not easy,
with the interest margin under pressure, securities business
suffering from markedly lower bourse turnover than last year
and sluggish credit demand, he said.
    "As far as the specific BfG environment is concerned, we
note a clear atmospheric improvement, which however is being
reflected in the figures only slowly," he added.
    Wegscheider said the bank was recovering from speculation
about its ownership, which had unnerved many customers last
year, and from the financial crisis involving the Neue Heimat
housing group linked to BfG's former trade union owners.
    Insurer Aachener und Muenchener Beteiligungs-AG &lt;AMVG.F>,
AMB, acquired 50 pct plus one share of BfG late last year.
    Wegscheider said that earnings from trading on the bank's
own account in 1986 had been a little higher than partial
operating profits, but had performed better in the first half.
    Following the AMB acquisition, BfG sold its 25.01 pct stake
in &lt;Volksfuersorge Deutsche Lebensversicherung AG>, its 74.9
pct in &lt;BSV Bank fuer Sparanlagen und Vermoegensbildung AG> and
five pct of &lt;Allgemeine Hypothekenbank AG>.
    These sales produced extraordinary earnings of 700 mln
marks, with parent bank earnings from profit transfer
agreements rising to 494.18 mln marks in 1986 from 54.24 mln in
1985, and other earnings including writing bank risk provisions
rising to 317.95 mln marks from 65.67 mln.
    Wegscheider said most of the extraordinary earnings went
into risk provisions.
    Total risk provisions, undetailed, were more than twice as
high as in 1985, Wegscheider said. Published group risk
provisions rose to 865.9 mln marks from 366.7 mln. But the
share of credits to problem countries covered by risk
provisions was still below 50 pct at BfG, he said.
    The BSV Bank stake sale was one of the main factors behind
a 3.8 billion mark drop in the group balance sheet in 1986.
    Wegscheider said the re-organization of BfG, planned before
the AMB acquisition and involving a decentralization, would
occupy much of BfG's energies this year. BfG and AMB were also
looking at ways of cooperating in sales of services.
 REUTER
