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November 29, 2007 |
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IKB DEUTSCHE: Expects Higher Losses; Seeks More Funding IKB Deutsche Industriebank AG will likely post over EUR6 billion in losses from an initial estimate of EUR3.5 billion as a result of its unsuccessful speculation on the US subprime mortgage market, the Financial Times relates citing a Frankfurter Allgemeine Zeitung report. According to the report, Germany's state-owned KfW Bankengruppe, which holds a 38 percent stake in IKB, is now expected to provide further financing to fund a rescue. KfW has recently increased its risk shield for IKB by EUR2.3 billion to EUR4.8 billion based on new risk valuation information, AP Worldstream says. Karin Matussek of Bloomberg News relates, citing people familiar with the matter, that IKB may need to increase its rescue package by EUR400 million in the event that the US subprime crisis endure on the global financial markets. Private and savings banks have committed EUR500 million to IKB as risk protection, Borsen-Zeitung says, and they are reportedly not ready to provide IKB with more funding. IKB has notified Germany's financial watchdog, Bundesbank and German Financial Supervisory Authority (BaFin), that it could face more liquidity problems if it fails to secure necessary financing, Thomson Financial relates. KfW has scheduled an extraordinary meeting with the administrative board to discuss IKB's situation this week, Bloomberg relates. According to Borsen-Zeitung, IKB is currently in talks with Deutsche Postbank, the banking subsidiary of German national postal services provider Deutsche Post, regarding a sale of its corporate customer credits in a move to improve IKB's equity capital situation. The German banks, however, are said to oppose this plan. About KfW Bankengruppe Headquartered in Frankfurt, Germany, KfW Bankengruppe -- http://www.kfw.de/EN_Home/ -- deals with the promotion of the development and transformation countries, export and project financing, promotion of middle class, existence founders and start ups, promotion living economy, environmental and climatic protection, education and infrastructure. With 3,900 employees, KFW Bankengruppe has its locations in Berlin, Bonn and Frankfurt am Main. Owned by the federal government and the Laender, it is one of the leading banks in Germany. About IKB Deutsche Headquartered in Dusseldorf, Germany, IKB Deutsche Industriebank AG -- http://www.ikb.de/ -- pioneered the long-term industrial loan and provides medium-sized companies with long-term financing. The bank operates in several German locations, as well as branches in the United Kingdom, Luxembourg, Spain and France. IKB had previously invested in securitized loans on the US market for subprime mortgages, which are now almost worthless. This resulted in a deep-seated crisis within the bank, pushing it on the brink of bankruptcy. * * * As reported in the TCR-Europe on Oct. 4, 2007, Fitch Ratings has downgraded IKB Deutsche Industriebank AG's hybrid debt securities to Long-term 'BB-' from 'A'. They remain on Rating Watch Negative. IKB is rated Long-term Issuer Default 'A+' with Stable Outlook, Short-term IDR 'F1', Support '1' and Individual 'F'. Its subordinated debt issues are rated 'A'. IKB's hybrid capital instruments rated Long-term 'BB-' and on RWN are: -- EUR75 million IKB Funding Trust I's perpetual notes -- EUR400 million Funding Trust II's perpetual notes -- EUR100 million IKB International SA's capital contribution certificates maturing in 2009 -- EUR200 million Hybrid Raising GmbH's perpetual capital notes linked to a silent participation in IKB -- EUR200 million Capital Raising GmbH's perpetual notes linked to a silent participation in IKB -- EUR70 million IKB International SA's capital contribution certificates maturing in 2010 -- EUR150 million Propart Funding Ltd's profit participation certificates maturing in 2015. |
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