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GERMAN DEVELOPMENT BANKS PLAYING A VITAL ROLE IN RESTRUCTURING OF NEW FEDERAL STATES

 GERMAN DEVELOPMENT BANKS PLAYING A VITAL ROLE IN RESTRUCTURING
 OF NEW FEDERAL STATES
 FRANKFURT, Germany, June 10 /PRNewswire/ -- Government-sponsored development funds for eastern Germany "have been accepted wholeheartedly by the target groups" and "are an important instrument in establishing a strong medium-sized business sector in eastern Germany," according to DB Research in its latest report in the "Focus Germany" series.
 The institute writes that, over the past two years, the wave of new firms established in eastern Germany had driven up demand for new funds from the three federal banks. Out of the banks' total loan commitments of approximately DM 84 billion in 1990 and 1991, about DM 50 billion, or 60 percent, has gone to east German enterprises. In 1991 over DM 70 billion was invested (privately and publicly) in eastern Germany, while the new commitments of the three development banks came to DM 40 billion, DB Research writes.
 The government-owned banks are the Kreditanstalt fur Wiederaufbau (KfW), the Deutsche Ausgleichsbank (DtA) and the Berliner Industriebank AG (BIB). They offer long-term loans at fixed rates lower than those on the capital market. Currently available at 7.5 percent interest, the loans are targeted to finance reconstruction, the start-up of new small- and medium-sized businesses and industrial firms, and environmental protection plans.
 Including supplementary programs, the development funds provide up to 75 percent of total investment costs, notes DB Research. Direct financing through these programs may not exceed 50 percent of investment costs, with an absolute limit of DM 1 million per project (excluding local financing schemes).
 In 1991, loans by federal development banks totalled DM 51.4 billion, of which DM 40.1 billion, or 78 percent, went to the New Federal States. The largest part of that funding came from the KfW, which lent DM 31.7 billion -- DM 24.2 billion, or 76 percent, of which went to eastern Germany. The Deutsche Ausgleichsbank lent a total of DM 14.8 billion, with DM 12 billion, or 81 percent, going to eastern Germany. For the Berliner Industriebank AG, the total was DM 4.9 billion, with DM 3.9 billion, or 79 percent, going to the New Federal States.
 For complete text, please call the Ute DeFarlo, vice president, communications, TransAtlantic Futures, Inc., 202-462-1222, or fax 202-462-1229.
 -0- 6/10/92
 /CONTACT: Ingelies Buhl of Deutsche Bank Research, 011-49-69-7100-7209/ CO: TransAtlantic Futures, Inc. ST: IN: FIN SU:


TW -- DC020 -- 8834 06/10/92 12:41 EDT
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Date:Jun 10, 1992
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