Germany's LBBW bank has 1 bn euros in Iceland: report
Time is GMT + 8 hours Posted: 9-Nov-2008 03:20 hrs
The headquarters of Germany's biggest public sector bank Landesbank Baden-Wuerttemberg (LBBW) in Stuttgart, southern Germany. LBBW has one billion euros (1.28 billion dollars) tied up in Iceland, which has been brought to the edge of bankruptcy by the global financial crisis, the daily Suddeutsche Zeitung reported Saturday.
Germany's biggest regional bank LBBW has one billion euros (1.28 billion dollars) tied up in Iceland, which has been brought to the edge of bankruptcy by the global financial crisis, the daily Suddeutsche Zeitung reported Saturday.
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The paper quoted "financial sources" and said the bank refused to comment on the report.
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On Friday a spokesman for the Stuttgart-based Landesbank Baden-Wuerttemberg told AFP the bank was "closely" studying whether to take advantage of a banking sector rescue package put in place by the government in mid-October.
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In recent weeks the bank has maintained it would not seek state aid.
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"But the situation has got even worse on the markets" and "other banks have shown the way," including BayernLB, HSH Nordbank and WestLB as well as the second biggest private bank Commerzbank, the spokesman said.
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He did not indicate whether LBBW was considering a recapitalisation or state guarantees, the two options in the government bailout package.
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LBBW's exposure in Iceland could have put the bank in serious difficulties, the Suddeutsche Zeitung said.
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Iceland's once booming financial sector has collapsed under the weight of the worldwide credit crunch, forcing the government last month to take control of the major banks as its currency has nosedived.
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In its attempt to ward off national bankruptcy, Reykjavik has sought a loan of two billion dollars from International Monetary Fund and is hoping for another four billion from its Nordic neighbours, the European Central Bank and the Federal Reserve in Washington and the European Union. — AFP
