Two more German banks admit exposure to Lehman failure
Meanwhile, the German government's own bank, KfW, suspended two top executive officers after the bank’s blunder.
Munich -- Two more German public banks, Bayern LB and NRW Bank, disclosed Friday they were exposed by the collapse this week of US investment bank Lehman Brothers.
The admissions came a day after a federally controlled German bank KfW said its exposure to Monday's Lehman failure totaled 536 million euros (772 million dollars).
In a letter to staff obtained by DPA, Munich-based Bayern LB, which is controlled by Bavaria state, put its risk at up to 300 million euros (432 million dollars).
"Like many other banks active worldwide, our company had a business relationship over many years with Lehman Brothers," said the letter signed by Bayern chief executive Michael Kemmer.
He said accountants were still comparing which sums were credits and which were debts to establish the net exposure, but the figure so far was "up to 300 million euros."
NRW Bank, controlled by the state of North Rhine Westphalia, said it had lent money to Lehman Brothers, but declined to say how much. "They weren't problem investments," said a spokesman.
Meanwhile, the German government's own bank, KfW, suspended two top executive officers from their duties Thursday after blunders that lost KfW 770 million dollars in the Lehman Brothers failure.
In the worst blunder, KfW deposited 350 million euros with Lehman on Monday, just hours before Lehmann declared itself insolvent, although the Lehman failure had been Sunday's top world news story.
KfW, which holds government stock portfolios and makes soft loans to homeowners and students, suspended executive board members Detlef Leinberger and Peter Fleischer, said German Economics Minister Peter Glos.
Glos chairs the supervisory board of KfW, dubbed "Germany's dumbest bank" by the mass-circulation paper Bild on Thursday. A more junior manager was also suspended.
KfW said earlier its exposure to the Lehman failure, including the unwise remittance and 186 million euros in credit, totaled 536 million euros (772 million dollars).
The supervisory board also approved the sale of a KfW subsidiary, IKB, to US private-equity investor Lone Star.
Under a contract negotiated in August, Lone Star is to pay 115 million euros for KfW's 90.8 percent of IKB.
In Germany's worst hit from the US sub-prime meltdown, IKB lost hundreds of millions of dollars last year after investing in nearly worthless structured-finance paper secured with US home mortgages.