Monday, January 28, 2008

A Landesbanken Super-SIV?

(FT Alphaville) Here’s a big bad round number: Germany’s four Landesbanks together have total exposure of €80bn to potentially toxic US subprime and they are now considering setting up a special purpose vehicle to hold all the infected paper.

It comes from Focus, the German magazine, who cite the combined exposure of BayernLB, LBBW, WestLB and HSH Nordbank. There were no further details on any bailout plan, which would seem to be based on the failed M-LEC, or “Super Siv,” idea in the US.
Bayern itself could need a write-down of €2bn, the magazine said, although Reuters quoted a spokesman as saying that no figures were available.

WestLB last week reported subprime write-downs of €1bn, while earlier in the month LBBW insisted it would still post a profit for 2007 despite US mortgage-related problems. Meanwhile Reuters reported a HSH Nordbank spokesman as putting the bank’s subprime exposure at €1.8bn.

Last summer, of course, two German banks - IKB and Sachsen - proved to be amongst the first casualties of the credit crunch and sector followers have been waiting for more problems to emerge ever since.

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