WEST GERMAN BANKS SLOWLY CUTTING KEY SAVINGS RATES

  West German commercial banks are
  cautiously cutting key savings and lending rates, banking
  sources said. The cuts follow nearly two months after the
  Bundesbank reduced leading interest rates, far longer than the
  usual interim period.
      A Deutsche Bank AG &lt;DBKG.F> spokesman said it is cutting
  leading savings rate for private customers on a regional basis
  by 0.5 percentage points to two pct. Dresdner Bank AG &lt;DRSD.F>
  and Commerzbank AG &lt;CBKG.F> have initiated similar moves. Bank
  fuer Gemeinwirtschaft AG &lt;BKFG.F> cut rates 0.5 pct generally.
      The delay was partly due to commercial banks' desire to
  gauge customer reaction to a similar move by regional savings
  banks.
      A fall in customer savings because of lower rates could
  reduce cheap refinancing available to banks, forcing them to
  draw down relatively expensive funds from other sources, one
  economist at the German Banking Association said.
      But the volume of savings funds may not be substantially
  undercut by lower savings rates because many customers are
  parking funds in savings accounts in the hope they can reinvest
  them at higher yields in the future, he said.
      He said this may conflict with Bundesbank aims to move more
  funds from relatively short-term deposits to longer-dated
  securities to reduce strong growth in its central bank money
  supply aggregate.
      The aggregate showed annualized growth of a provisional 7.5
  pct in February against the fourth quarter of last year,
  unchanged from January. The growth rate was outside the
  expanded target range of three to six pct.
      Few banks have so far reduced lending rates to private
  customers, though lending rates for corporate customers are
  beginning to decline.
  

