IKB worries force German state bank KfW to raise risk provisions

0 Comments | AFP, November, 2007

FRANKFURT (AFP) — The German state-owned bank KfW said Tuesday it had almost doubled risk provisions to cover possible additional subprime losses at the troubled business lender IKB, in which it holds a 38-percent stake.

KfW raised its provisions by 2.3 billion euros (3.4 billion dollars) to a total 4.8 billion, a statement said, a few days after press reports said that German banks which had helped IKB in the past were no longer willing to do so.

KfW owns around 38 percent of IKB, a specialist in loans to small and medium-sized enterprises, but the move did not mean KfW would necessarily have to provide more funds to IKB, a spokeswoman stressed.

The move was the result of a re-evaluation of risk at Rhineland Funding, an IKB conduit that threw the group into...