German lender IKB Deutsche Industriebank AG, whose near-failure amid the subprime mortgage crisis sent shockwaves through Europe's financial sector, reiterated yesterday that its full-year loss could reach almost $1 billion (€700 million)
"In view of the crisis, the board of managing directors expects the group to record a net loss for the 2007/2008 financial year (according to IFRS) of up to €700 million," IKB said yesterday, confirming its forecast. "For this reason, it is expected there will be a negative impact on the profit-participation certificates and silent partnership contributions."
IKB made a net profit of €180 million a year earlier. Düsseldorf-based IKB said its annual meeting, planned for the fourth quarter of 2007, could slip into the first quarter of 2008 if special audits of its books now under way affect annual financial statements.
IKB, which lends mostly to mid-sized companies, released delayed fiscal first-quarter results for the three months to June 30th that reflect events before the debt crisis exploded, triggering a €3.5 billion rescue by other German banks. The bank's problems spread to Dublin, where an IKB-controlled fund, Rhinebridge, was listed.
The fund ran into credit difficulties and IKB was forced to bring it back on to its own balance sheet to facilitate an injection of funds.
Fellow German bank SaschenLB faced separate difficulties at its Dublin business and required a €17.5 billion bailout before another German financial institution agreed to take it over.
IKB's operating profit fell by two-thirds to €18.4 million, primarily due to a €37 million reduction in net income from financial instruments at fair value, it said.
Consolidated net income fell by two-thirds to €12 million.
Germany's government is thinking of selling the IKB stake it holds through state development bank KfW, which itself put up more than €8 billion in liquidity guarantees to bolster IKB.
Germany's public sector banks would be interested in buying the German government's 38 per cent stake, the head of the country's savings banks association DSGV has said. - (Reuters)
