Friday, Jul. 31, 1964
The Union Banker
The Marxist origins of Germany's labor movement long made it unthinkable for unions to support or even condone capitalism. Then postwar prosperity, bulging union coffers, and "co-determination" laws--which placed union leaders on corporate boards--gradually converted labor into an eager partner in the German economy. Trade unions today own Germany's biggest housing construction company, and share with cooperatives ownership of its second-ranked deep-sea fishery and the largest cut-rate life insurance company in Europe. Labor's proudest possession is one of the world's few union-owned banks, the Frankfurt-based Bank fur Gemeinwirtschaft, which lately has been engaged in the highly capitalistic practice of gobbling up competitors: it has just bought control of Cologne's Bau- und Handelsbank and Frankfurt's Investitions-und Handelsbank.
Unorthodox but Rewarding. Trade unions and consumer cooperatives founded six small banks in 1948 and 1950, merged them to form B.F.G. in 1958, and still hold all of its stock. The bank avoids the natural inclination to restrict its business to union finances and interests, aggressively competes with traditional banks for commercial and industrial customers. Union and cooperative funds, which once constituted half of its deposits and credits, today account for only 18% of deposits and 15% of credits. The bank's assets have grown to nearly $1 billion, making it Germany's fourth largest bank. Some of this rapid growth has occurred just because of B.F.G.'s proletarian background. Union officials sitting on corporate boards have provided the combination for getting many industrial accounts into the vaults, and much of the bank's foreign business has been initiated through union contacts all over the free world.
The instinctive desire of a union bank for full employment has led B.F.G. into several unorthodox but rewarding transactions. While most other banks stood aside, B.F.G. last year purchased several companies left insolvent in the collapse of the Hugo Stinnes industrial empire (TIME, Oct. 18, 1963), is keeping them in operation until they can be resold. When the owner of a huge Nurnberg photographic mail-order house was arrested recently on suspicion of tax fraud, B.F.G. saved his company by putting up more than $2,000,000 to bail him out. By such ventures, the bank has preserved thousands of jobs, also reaped dividends of good will and new accounts in the German business community.
Considerate in a Way. B.F.G.'s labor proprietorship is symbolized by its board of supervisors, which is headed by German Trade Union Federation Boss Ludwig Rosenberg, 61, one of the few Jews now in high positions in Germany, and studded with the names of other labor leaders. The bank is actually run by easygoing President Walter Hesselbach, a professional banker who has never worn a blue collar, usually arrives at work an hour late "so that I don't disturb my colleagues in their morning chat and coffee hour." Such considerate treatment by Hesselbach extends only to his employees. B.F.G.'s hard-pressed competitors have learned that they cannot bank on it.
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