German subprime victim IKB warns of heavy losses

FRANKFURT, Sept 3, 2007 (AFP) – German bank IKB, badly hit by its exposure to bad housing loans in the United States, said on Monday it expected losses of between 600 and 700 million euros (818 million dollars and 955 million dollars) in its fiscal year 2007-2008. IKB, whose financial year runs from April to March manages assets worth about 52 billion euros. IKB said the problems linked to the subprime loans crisis were the main cause of the losses.

At the height of the subprime crisis last month, IKB was rescued with an 8.1 billion dollar liquidity line extended by the state-owned KfW bank, its main shareholder.

IKB also announced it was restructuring its activities, which would also have a negative impact on its performance.

It said it would be focusing on financing small and mid-sized companies.