IKB:KfW Also To Assume EUR1B Possible Losses On IKB's Books

August 08, 2007, 1:14 a.m. EDT 1 Min Read

FRANKFURT (Dow Jones)-- IKB Deutsche Industriebank AG (IKB.XE) said Thursdaythat German development bank KfW has not only taken on all of IKB's risks withregard to its Rhineland Funding investment vehicle, but has also assumed "expected possible losses" of up to EUR1 billion from risk-exposed positions onIKB's balance sheet.

KfW, which holds 38% of IKB, earlier this week said IKB's obligations toRhineland Funding amounted to around EU8.1 billion.

KfW also said in a statement that it has liquidity reserves on its balancesheet amounting to more than EUR12 billion.

"Thus the liquidity for the next 12 months is covered, even taking intoaccount new business. Furthermore, IKB's money market lines with other banks areopen and available to IKB," it said.

The statement came as IKB's shares were down almost 40%. Immediately followingthe news, pressure was relieved and it rebounded by 10 percentage points. Theshares closed down EUR4.87 or 28% at EUR12.31.

Earlier Thursday, German banks confirmed that they would also take part in therescue operation of IKB.

The German commercial banks association BdB said its members will contribute EUR500 million to a total EUR3.5 billion risk shield for IKB.

German regional banks and savings banks, owned by state and federalgovernments, and the cooperative banks earlier Thursday said they will alsocontribute, but didn't confirm media reports that their contribution would alsoamount to a combined EUR500 million.

Company Web site: http://www.ikb.de

-By Ragnhild Kjetland; Dow Jones Newswires; +49 69 29 725 504;ragnhild.kjetland@dowjones.com

IKB also said in a statement that it has liquidity reserves on its balancesheet amounting to more than EUR12 billion.

("IKB: KfW To Assume EUR1B Possible Losses From IKB's Books -2-," published at 1533 GMT, incorrectly attributed the statement to KfW.)