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of the banking activities, although the Post Office Savings Bank (Postsparsbanken) and the Postal Check Service (Postgiro) provide some competition. In addition, a number of credit associations are run by cooperatives, primarily to give rural residents greater access to banking services. As in most other developed countries, the growth of the banking system has been rapid. Total deposits in most banking institutions grew 53% between 1965 and 1970 (Figure 16). The deposits held by the Postgiro grew 70%, while deposits in agricultural credit associations grew 86%. These two institutions are relatively small, however, when compared with the commercial banks and savings banks.

Commercial banks are prominent suppliers of credit to industry and commerce. In 1970 they provided about 40% of the total outstanding credits to these sectors. The housing construction industry is also a significant borrower. Swedish commercial bank loans are almost entirely short-term, with repayment due in 6 months. It is common, however, for loans to be renewed, or "rolled over," so that in effect they provide long-term financing. This practice has enabled the commercial banks to meet a substantial part of industry's long-term capital requirements.

The trend in Swedish commercial banking has long been toward mergers into fewer, larger banks. Effective 1 January 1972, two of Sweden's largest banks, Scandinavian Bank and the Private Bank of Stockholm, merged to form Sweden's largest bank, the Private Bank of Scandinavia (Skandinaviska Enskilda Banken), with assets totaling US$4.8 billion as of 30 April 1972. This deal, the largest in Swedish financial history, placed almost 40% of the country's commercial banking activity in the hands of the new institution. This move was followed by the 30 June 1972 merger of the Bank of Goteborg, with over $1 billion in assets, and Snutlands Bank, one of the leading provincial banks, with over $200 million in assets. From a high of 84 in 1908, the number of commercial banks (all privately owned with the exception of the state-owned Swedish Credit Bank) has declined to 11 in 1972. As of 31 December 1970, the five largest banks, which handled approximately four-fifths of the commercial banking business, were as follows (assets in millions of U.S. dollars):

Checking accounts are not widely used in Sweden. Moreover, individuals and businesses with surplus cash generally prefer time and savings deposits as an alternative to portfolio investment. In consequence, time and savings deposits, rather than demand deposits, predominate among the liabilities of the Swedish commercial banks and represent about four-fifths of the total deposits of the public in commercial banks.

Commercial banks act as underwriters of bond issues and as agents in bringing together borrowers and lenders in the case of privately arranged loans. They also perform stock-brokerage services; it is estimated that 95% of all transactions on the Stockholm Stock Exchange are executions of orders transmitted by banks. Through correspondent banks in various parts of the world, together with a few overseas subsidiaries, the Swedish banks efficiently finance Sweden's foreign trade.

The increasingly close economic ties among Scandinavian nations have led to greater collaboration among Scandinavian commercial banks. To facilitate the financing of Nordic enterprises' foreign transactions, a group of Scandinavia's leading banks (the Swedish Commercial Bank, the Norwegian Credit Bank, the Copenhagen Commercial Bank, and Finland's National Stock Bank) established the Nordfinanz-Bank in Zurich in 1964, and, together with certain Swiss interests, they established the Nordic Bank of Commerce, Paris, in 1967. The banks in this group together finance approximately one-third of Scandinavia's foreign trade. Further expansion of international banking ties included the 1968 purchase by the Bank of Goteborg and the Christiania Bank and Credit Fund, Oslo, of a minority interest in the Transatlantic Bank, Paris. In 1969, the Scandinavian Bank, Ltd., London, was established by Sweden's Scandinavian Bank, Finland's Northern Union Bank, Ltd., Denmark's Danish Farmers Bank, and Norway's Bergen Private Bank. The most recent joint foreign banking operation was the formation in 1971 of the Nordic Bank, Ltd., in London, in which the Swedish Commercial Bank, the Norwegian Credit Bank, and Finland's Kansallis-Osake-Pankii each have a one-third interest.

The commercial banks face keen competition from other banking and financial institutions. Sweden's 273 savings banks at the end of 1970 accounted for approximately 34% of total bank deposits by the public. These banks are generally smaller than, but similar to, the commercial banks. They offer a wide range of ordinary banking services, including checking accounts, and are important in serving small savers. The outstanding credits of the savings banks consist

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200090018-7