IKB reports $1.6 billion 9-month loss

Tue May 27, 2008 7:10 AM EDT

BERLIN — IKB Deutsche Industriebank AG, a German lender badly hit by the U.S. subprime lending crisis, said Tuesday that it lost about $1.6 billion in the first nine months of 2007 on the back of write-downs that led to a bailout last year.

The bank said that its net loss for the nine months that ended Dec. 30 was 1 billion euros ($1.6 billion) compared with a profit of 142 million euros a year earlier. It said that its net interest income also slipped to 410 million euros ($646.2 million) in the April-December period compared with 492 million euros a year earlier.

Shares of IKB fell 2.6 percent to 3.69 euros ($5.82).

IKB also said that its provisions for likely loan losses in the period was 207 million euros ($326.3 million), up from 192 million euros, while net fee and commission income dipped slightly to 44 million euros ($69.4 million) from 45 million euros.

As for the third quarter results, which had been long delayed because of its bailout, the bank said it earned 10 million euros ($15.8 million) in the October-December period, but did not provide the figures from a year earlier. However it said the result was hurt by another 70 million euros ($110.3 million) in write-downs, along with tax-related expenses of 61 million euros ($96.1 million).

The bank forecast a loss of 200 million euros ($315.2 million) for the year.

IKB, which lends to small- and medium-sized German companies, has been battered by exposure to bad U.S. debt since last summer, when its chief executive resigned. Its problems sprang from its Rhineland Funding investment vehicle's apparent inability to cover its funding.

Major shareholder KfW Banking Group and the banking industry have put together rescue packages for IKB totaling more than 8 billion euros ($12.6 billion) and have agreed that IKB should be sold.

IKB, in a statement, said that the sale of stakes owned by KfW and Stiftung Industrieforschung, is moving forward, with several interested bidders, though it did not identify them. KfW holds a 45.5 percent stake in the bank, while SI holds 10.7 percent.

"In May, IKB held discussions with nine bidders, especially with their management and groups of experts," IKB said in a statement. "Meanwhile, KfW has received a series of interesting, substantiated offers and intends to short list the number of bidders and thereafter start decisive negotiating with due-diligence."

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