BERLIN -- Amid allegations of price-fixing, the German cartel office said it has begun an investigation into how some of the country's largest financial institutions set interest rates on savings accounts.

The antitrust regulator said it suspects that if competition were sufficient, rates on German savings accounts would probably be much higher than the 2.5% to 2.75% banks are offering now.

The rare inquiry involves the Big Three national commercial banks -- Deutsche Bank, Dresdner Bank, and Commerzbank - as well as Berliner Bank, Berliner Volksbank, Grundkreditbank, Landesbank Berlin, and Postbank.

These are the main providers of savings accounts in the Berlin area, where the investigation is centered. The cartel office said that although official and market interest rates have risen significantly since 1988, rates on savings accounts have barely changed.

This led cartel agency officials to contend that there was essentially no competition for consumer savings, reflected in cartel behavior by the banks in the Berlin market.

Although the allegations apply to all of Germany, the investigation is focusing on Berlin for economic reasons.

The charges were reinforced by Hans Tietmaeyer, vice president of the Bundesbank, who said in a newspaper interview that the central bank is "unhappy" with the interest on savings.

"The banks would be well advised to treat savers - particularly small savers -- as they always have done" to boost the rate of savings in the economy, the central banker said.

Tie to Discount Rate Resisted

In response, the German Association of Savings Banks in Frankfurt said it does not give the cartel office inquiry "a chance of success."

The savings bank group said that contrary to the cartel office allegation, the effective interest on standard savings accounts ranges from 2.25% to 5.25%, while some accounts with special conditions average 7.10%.

German banks recently rejected pleas from politicians in the two major parties to tie interest rates to the central bank's discount rate. Meanwhile, the cartel office said it had failed to receive "satisfactory answers" from Deutsche Bank to informal questions about its rate policies.

Commercial bank spokesmen pointed out that two-thirds of German savings have flowed into accounts paying more than 8.5%, and that the traditional low-rate savings account had lost much of its importance in bank funding.

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