The fallout of the US subprime mortgage market hit the German banking sector on Monday as IKB, a specialised lender to smaller companies, and Commerzbank, the country’s second-biggest bank, warned they would be hit by losses from risky property loans. IKB became one of the biggest European casualties of the subprime market’s woes as it ousted its chief executive and issued a profit warning. The bank said full-year earnings for 2007-08 would be “significantly lower” than the €280m it had forecast. The warning sent shares in IKB plunging 20.8 per cent to €17.02. KfW, the state-owned development bank that owns 38 per cent of IKB, said it would cover potential losses in order to contain the crisis. Commerzbank fell 2.7 per cent to €30.86 after it said losses in the subprime market would cost it €80m.
