June 2, 2010 3:00 am
Two prominent members of IKB's supervisory board have told a court that they were not aware of the scale of the German bank's subprime exposure that led to its near collapse.
The lender was the first German bank to feel the effects of the global financial crisis in 2007, forcing authorities into an urgent bail-out. KfW had to take control of IKB, costing taxpayers €8bn.
Stefan Ortseifen, IKB's former chief executive, is on trial charged with market manipulation - the first bank chief to face trial in Germany as a result of the crisis. He denies the charges.
The charges centre on a press statement in July 2007 that reassured the market about IKB's investments, a week before the bank faced near collapse. Jörg Asmussen, who was on the supervisory board at the time and is now a deputy finance minister, said he had asked about the bank's "direct or indirect" subprime exposure in June 2007. He said Mr Ortseifen said there was no direct exposure and that indirect exposure was limited. The trial continues.
James Wilson, Düsseldorf
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