Bundesbank Says `Banking Pool' Created for IKB

Bundesbank Says `Banking Pool' Created for IKB

http://www.bloomberg.com/apps/news?pid=20601100&sid=aHLLmECJCPAY&refer=germany

By Christian Vits


Exterior of the Bundesbank Aug. 9 (Bloomberg) -- The Bundesbank said German banks created a ``banking pool'' to back IKB Deutsche Industriebank AG, the German bank facing a bailout over subprime mortgage losses.

``The meeting of representatives of German banks at the Bundesbank was about details and the contractual implementation of a risk-coverage package for IKB,'' the Bundesbank said in an e- mailed statement today. ``The KfW was appointed to lead the pool.''

Germany's state-owned KfW Group and banking associations agreed to cover as much as 3.5 billion euros ($4.8 billion) of potential losses at IKB. Late payments on U.S. subprime mortgages to borrowers with poor credit histories are at the highest since 2002, driving down the value of bonds backed by home loans and roiling the credit markets.

IKB two days ago replaced its chief financial officer, eight days after the chief executive officer left. The company also said it will seek regulatory approval to postpone reporting its quarterly results until Sept. 28 from Aug. 14.

The Bundesbank hosted a meeting of the participants of a telephone conference held two weeks ago, when a rescue plan for IKB was agreed, it said earlier today. Bundesbank spokeswoman Elke Martens declined to say who is participating in the meeting.