The purpose of this paper is to provide empirical evidence on the effects of a banks equity holdings in firms on the banks performance. The analysis is based on accounting measures of Spanish banks, from 1992 to 2000. The findings support a positive relation between total equity stakes and bank performance. Furthermore, we find different implications depending on the type of bank holdings considered. The results indicate that the effects on bank performance are the best when holdings are in group and nonfinancial firms. Length: 32 pages