Morning:
9°c
‘Dumbest bank’ in Lehman deal
Allan Hall in Berlin19 Sep 2008
The German government has reacted with fury to an admission by federal bank KfW that it passed €300 million (£237 million) to Lehman Brothers only hours before it went under.
A KfW spokesman said the money was part of a swap arrangement, and there had been a “technical” error. German papers are describing KfW as “Germany's dumbest bank”. Two senior managers were today suspended over the fiasco.
Critics said a prudent bank would have held on to the money, knowing from news reports that Lehman was broke. Swaps are often programmed in advance into computers so they happen without human intervention.
The finance ministry in Berlin said the remittance was “infuriating”.
Set up in 1948, KfW is the federal government's in-house bank, lending to homeowners and industry. It is already reeling after a subsidiary, IKB, lost billions of euros last year and had to be bailed out.
