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Frankfurt's importance to

grow with EMU, bank says

FRANKFURT: Frankfurt will continue to play second fiddle to London as a financial centre in the foreseeable future but will gain importance with European monetary union, Sweden's S-E-Banken said on Thursday.

While London was and would remain a "fantastic" platform for investment banking, the key to Frankfurt's strength was the need for commercial banking services in an economy the size of Germany's, Skandinaviska Enskilda Banken AB said.

"Let's face it that London has a platform that is fantastic," S-E-Banken President Bjoern Svedberg told a news conference here.

"I see London as the financial centre for Europe in the foreseeable future. But with the introduction of the Euro I see an expansion of Frankfurt's importance."

Svedberg's comments contrast with scepticism among other foreign banks which have warned that Frankfurt is losing out because German banking regulations remain too restrictive.

The Association of Foreign Banks in Germany recently warned that with Frankfurt's key attraction, the mark, set to vanish in 1999 with monetary union, banks were placing their faith in German efforts to improve trading conditions.

S-E-Banken itself has scaled its staff in Germany down to 110-120 people from 180 three years ago, and its business volume in Germany shrunk by about a third to 2.3 billion marks in 1994 compared with 3.2 billion in 1991.

But the bank, which returned to profit in 1995 after slumping to losses in Sweden's finance crash of the early 1990s, attributed the decline in its German business to weak loan demand and to its concentration on profitability.

The bank said it provides services including trade finance and cash management for most of the 800 Scandinavian-owned businesses in Germany.

Germany's is S-E-Banken's largest foreign market, accounting for roughly 15 percent of its foreign business, the bank said.-Reuter