German bank KfW could face billions in US loan losses: report

0 Comments | AFP, December, 2007

FRANKFURT (AFP) — Exposure to the US market for more risky home loans at troubled German lender IKB could cost its main, state-run owner more than five billion euros (7.2 billion dollars), reports said Monday.

KfW owns 38 percent of the shares in IKB, which invested heavily in securities backed by high risk US home loans, and could now pay a high price in turn, KfW board spokeswoman Ingrid Matthaeus-Maier told the Sueddeutsche Zeitung newspaper.

"It's possible that it is less than five billion euros, but also more, if market conditions worsen further," she said.

KfW, which is the financial arm of the German government, has already had to increase its provisions by 4.95 billion euros to cover potential losses at IKB and has written down the value of its stake...