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FRANKFURT : German bank IKB, saved from the brink of bankruptcy three months ago, could announce more losses from the US sub-prime crisis, a press report said Friday.
The new losses could total 300 million euros (440 million dollars), the Frankfurter Allgemeine Zeitung (FAZ) daily said, citing financial sources.
"Negative developments in the market are having an impact on the credit line" extended to IKB by the state-owned banking group KfW, a spokeswoman for the latter told AFP later, without elaborating.
She did confirm that a meeting of banks that had helped bail out IKB had taken place recently, without revealing the nature of the discussions.
IKB, which specialises in loans to small and medium sized enterprises, found itself in dire straits in late July after investing in securities linked to the US market for high-risk mortgages.
It was saved by a pool of banks led by KfW, which provided an 8.1 billion euro liquidity line for IKB, the first German bank hit by the US home loan debacle, which later sparked a credit crisis after banks became wary of lending to each other.
Private German banks agreed however to extend a credit line of 3.5 billion euros to IKB, if needed, and the FAZ said they were now ready to make more money available.
IKB shares plunged by 5.03 percent to 12.45 euros in afternoon Frankfurt trades, while the MDax index on which it is listed had lost 0.62 percent overall.
KfW holds a 38 percent stake in IKB.
"It is not very trust-inspiring that potential new losses are emerging," one Frankfurt trader noted, while a second one was even more negative.
"This is absolutely not a surprise. Why would the replaced management or any of the banks that bailed out the IKB know about the losses?" he asked. "We wouldn't place a single dime in this bank."
IKB's losses are significant relative to its size, but small compared to some that have been reported by major international banks.
The British bank Barclays said its investment arm took a hit of 1.3 billion pounds (1.8 billion euros, 2.7 billion dollars) between the start of July and end of October.
Rival HSBC said that its bad debts in the United States linked to the sub-prime crisis and subsequent credit squeeze rose by almost a third to 3.4 billion dollars in the third quarter.
In the United States, Citigroup said it would have to write off up to another 11 billion dollars, far higher than the two billion dollars it saw in mid-October.
And the Wall Street investment bank and brokerage Merrill Lynch revealed last month it would take a hit totalling 7.9 billion dollars.
- AFP /ls
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