German state bank KfW faces 5-bln-euro subprime burden: report

0 Comments | AFP, December, 2007

FRANKFURT (AFP) — German state-owned bank KfW will carry a burden on its balance sheet of about five billion euros (seven billion dollars) until 2017 owing to trouble at subprime-hit lender IKB, of which KfW owns 38 percent, a press report said on Friday.

In a pre-release of an article to be published Sunday, Der Spiegel quoted an internal KfW paper which said that 85 percent of the five-billion-euro burden would be accounted for by 2011.

A German banking pool led by KfW threw a 3.5 billion euro lifeline to IKB when problems emerged in the US market for high-risk home loans in July and August, with most of the amount borne by KfW.

Measures to save IKB, which specialises in loans to German businesses, have almost used up a 5.3 billion euro KfW fund...