German's KfW reports 1.8 billion euro 9-month loss

[TheLancinator]

German's KfW reports 1.8 billion euro 9-month loss
Associated Press


FRANKFURT, Germany – KfW, the German state-owned development bank, said Monday that write-downs and the bailout of IKB Deutsche Industriebank AG drove it to a 1.8 billion euro ($2.3 billion) loss in the first nine months of 2008.

KfW said in a statement that the loss, which was just slightly more than the 1.7 billion euro loss in the same period a year earlier, was the result of the exposure to the U.S. subprime lending crisis by IKB, of which it held a major stake. KfW said the IKB bailout cost it some 1.1 billion euros.

KfW also said its asset portfolio had write-downs that cost it another 1.6 billion euros ($2 billion) in the January-September period, along with losses stemming from Iceland's financial collapse.

KfW did not provide its third-quarter figures.

Last month, KfW transferred its roughly 90.8 percent holding in IKB to the Dallas-based Lone Star Funds. It has not released details of the deal, agreed to in August, but officials have said that the purchase price was in the low three-digit million euro range.

Duesseldorf-based IKB's problems sprang from its Rhineland Funding investment vehicle's apparent inability to cover its funding needs because of exposure to U.S. subprime loans.

The bank received a series of rescue packages totaling more than 8 billion euros ($10.1 billion).