AUSTRIA THE CO-OPERATIVES FACE TOUGHER TIMES Austria's century-old co-operative banking sector grew faster than competing state-owned and private banking groups last year. However, the impact of a tough new federal banking law could turn the tables in the decade ahead.
The Raiffeisen sector, with its core of nine regional credit co-operative networks, outstripped all other banking groups in 1985 in the growth of credit, savings and total deposits. The co-operative sector boosted its market share to 18% fro7 17.6% in lending activity with an expansion of 10.9%. The sector simultaneously hiked its market share to 25.5% from 25.1% last year with an 8.4% jump in savings deposits. The co-operatives' market share in building society deposits also expanded in 1985 to 34.9% from 34.7%.
Nevertheless, the dramatic balance sheet growth, that has been a feature of Austrian banking since the system was liberalized nearly a decade ago, will be muted starting next January 1 when a conservative new banking law takes effect. The law, which has been hailed as overdue by the big state-owned banking groups, is slated for final enactment early this summer. It is expected to set a lending ceiling of eight times equity and cap exposure to a single borrower at half of total equity.