IKB Warns Annual Loss Could Reach $1 Billion

German lender IKB Deutsche Industriebank, whose near failure amid the subprime mortgage crisis sent shockwaves through Europe's financial sector, forecast its full-year loss could reach almost $1 billion.

"In view of the crisis, the board of managing directors expects the group to record a net loss for the 2007/08 financial year (according to IFRS) of up to 700 million euros" ($990.9 million), IKB said on Friday.

"For this reason, it is expected that there will be a negative impact on the profit-participation certificates and silent partnership contributions."

Duesseldorf-based IKB said its annual meeting, now planned for the fourth quarter of 2007, could slip into the first quarter of 2008 if special audits of its books now under way affect its annual financial statements.

IKB, which lends mostly to mid-sized companies, released delayed fiscal first-quarter results for the three months to June 30 that reflect events before the debt crisis exploded, triggering a 3.5 billion euro rescue by other German banks.

IKB's operating profit fell by two-thirds to 18.4 million euros from 54 million, primarily due to the reduction in net income from financial instruments at fair value, it said.

Consolidated net income fell by 66.7% to 12 million.

The IKB bailout made nervous peers wary about lending to German banks for a time.

Germany's government is thinking about selling the IKB stake that it holds through state development bank KfW, which itself put up more than 8 billion euros in liquidity guarantees to bolster IKB.

Germany's public-sector banks would be interested in buying the German government's 38% stake, the head of the country's savings banks association DSGV has told Reuters.

Commerzbank Chief Executive Klaus-Peter Mueller has also said he would look at IKB if it came up for sale, while cooperative banks DZ Bank and WGZ bank have also said in the past that they could be interested.