Subprime crisis inflicts more pain at German banks

0 Comments | AFP, May, 2008

BERLIN (AFP) — Results from two German banks on Wednesday showed that the knock-on effects of the US subprime home loan crisis are still being felt around the world.

Commerzbank, Germany's second biggest private bank, warned after announcing a sharp fall in first-quarter profits that "it could be very difficult" for 2008 earnings to match the level of 2007.

It said that "while the immediate detrimental effects of subprime engagements appear to have passed their peak, there is evidence that the crisis is now making itself felt in other problem areas, among them leveraged buyouts (LBOs), collateralised debt obligations (CDOs) or consumer loans in the USA."

First-quarter net profit at Commerzbank slumped 54 percent from the year-earlier period to 280 million...