German-based Catholic bank admits it made "investment errors"

Aug 1, 2009, 16:29 GMT

Cologne - A German-based Catholic bank, advertising its supposedly ethical investment policies, admitted Saturday that it had invested money in defence and tobacco companies as well as a contraception manufacturer.

'We regret it, and will immediately rectify the error on Monday, without giving rise to disadvantages for our customers,' the chairman of Pax Bank, Christoph Berndorff, told the German Press Agency dpa.

Pax Bank, together with ecclesiastical Liga-Bank, had invested 578,000 euros (818,000 dollars) in British defence giant BAE Systems. The globally active armaments company produces submarines carrying atomic weapons, missile systems and fighter jets.

Pax, whose governing body is headed by the provost of Cologne Cathedral, had also invested almost 159,000 euros in shares of US pharmaceutical company Wyeth, whose products include contraceptives.

The bank also reportedly holds stocks worth 871,000 euros in British American Tobacco and Imperial Tobacco, according to German news magazine Spiegel.

Berndorff confirmed the initial findings by Spiegel, and said the bank's day-to-day business was managed by Union Investment.

'However it slipped through our own control as well, and we are sorry,' Berndorff said of the bank's investments.

Clients of Pax are predominantly ecclesiastical institutions, or those with links to churches such as religious orders, hospitals and charities as well as theology students.

'Pax Bank, as a bank for church and charity, has met the specific needs and wishes of its ecclesiastical clients since its founding in the year 1917,' the financial institution stresses. Ethical investment plays an important role.

Liga Bank, founded by Catholic priests, is Germany's oldest church bank.