German Banks Assn: Concerns Over Subprime Crisis Exaggerated

FRANKFURT -(Dow Jones)- Speculation that German banks are threatened by alooming banking crisis is exaggerated, the Association of German banks saidThursday.

The association, which represents major German banks including Deutsche BankAG (DB) and Commerzbank AG (CBK.XE), Thursday reached an agreement to contribute EUR500 million to a total EUR3.5 billion risk-shield to cover IKB DeutscheIndustriebank AG's (IKB.XE) exposure to U.S. subprime mortgage papers.

"With the joint risk-shield, a sustainable solution has been found to coverthe possible risks at IKB," the association's managing director Manfred Webersaid in a statement.

Whether there will be "actual losses" from the IKB debacle remains to be seen,Weber noted.

"In any case, he said, the involvement of the banking association, the FinanceMinistry, the supervisory bodies, KfW and other lenders means that the paymentobligations don't fall to individual banks."

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