Berlin -- German banks face further losses running into the billions of euros as only a quarter of their toxic assets have been written off, a newly released report said.

Germany's respected Der Spiegel weekly based its report on a survey of 20 banking institutions carried out by Germany's central bank, the Bundesbank, and the financial market watchdog Bafin.

The survey revealed that German banks possess 300 billion euros (400 billion dollars) in toxic assets and have so far only written off the most rotten, which represent a quarter of the total, the report said.

"The remainder is still registered in accounts at illusory values," said Der Spiegel.

According to the magazine, government economic experts believe the remaining write-downs are considerable and could lead to "very heavy new losses for the banks".

The finance ministry estimates the volume of assets at risk in the German banking sector to be in the region of one trillion euros, Der Spiegel said.

"In the worst case scenario, it could run to more than double the federal debt," an aide to Finance Minister Peer Steinbrueck told the magazine on condition of anonymity.

Several leading bankers have called for the creation of a "bad bank" as a way out of the credit crunch.

By allowing banks to dump bad assets and troubled loans, the proposed bank would help restore confidence between banks that was shattered by the financial crisis, leading to a squeeze on interbank lending and tighter credit for the economy at large.

But the Der Spiegel report said Steinbrueck believed the size of the assets at risk meant it would be irresponsible to create such an institution.

Germany's ruling left-right coalition has noted that 400 billion euros in loan guarantees for the banking sector in the so-called Soffin fund were designed with the same aim in mind, to jumpstart lending between banks.

Leading bankers say those guarantees distort competition in favour of banks that have state-backed guarantees however, and make conditions harder for those that have not needed the aid.

AFP/Expatica