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US housing crisis means problems for German bank

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US housing crisis means problems for German bank

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Stocks in the German bank IKB, which has been hit by the American housing crisis, have fallen sharply despite a rescue plan put together by other lenders. The bank’s problems prompted Germany’s financial watchdog to warn that an IKB collapse could trigger Germany’s worst financial crisis for 75 years. Sources close to the rescue plan admit they expect IKB to lose maybe a fifth of its investment in the troubled US subprime mortgage market. IKB’s interest is worth some 17 and a half billion euros. The scale of the bank’s exposure shocked investors. Its share price tumbled more than 40 percent on Thursday. Now IKB’s troubles have sparked fears that other German banks could also be hurt, leading to a wide-ranging collapse in market confidence.