KfW on Tuesday nearly doubled the amount it is setting aside to cover potential losses at German lender IKB to almost €5bn ($7.41bn) as it warned of a “dramatic” worsening of conditions in the US subprime mortgage market. Düsseldorf-based IKB nearly collapsed amid losses in the credit turmoil this year and was rescued in a bail-out led by KfW with support from Germany’s public and private sector banks. KfW said the outlook for Rhineland Funding, an investment vehicle launched by IKB, had deteriorated after it identified “crucial” new information about its risk exposure to the US subprime loan market. It said it had raised risk provisions on its balance sheet for potential losses at Rhineland from €2.3bn to €4.8bn.

This entry was posted by Gwen Robinson on Wednesday, November 28th, 2007 at 5:26 and is filed under Capital markets. Tagged with IKB, KfW. Edit this entry.