The financial crisis could still worsen and spill into the real economy this year, Germany’s top banking regulator has warned, denying it could have done more to head off the problems encountered by some of the country’s banks.

Jochen Sanio, head of BaFin, the financial services supervisory body, said there was still a risk of “negative feedback” for the financial system if the real economy suffered but there was no sign of liquidity problems at any German bank. “All norms are being met,” he said.

The near-collapse of IKB and SachsenLB last summer showed Germany to be an early casualty of the financial crisis, and several other state-owned lenders had to have losses covered by their owners. Mr Sanio, who has said the bailout of IKB helped to avoid Germany’s worst banking crisis since the 1930s, rejected the idea that BaFin could have acted differently before the crisis to prevent banks from making risky investments. “I am not prepared to accept that any blame attaches to BaFin... or that we have not made use in some way of powers that we had,” he said.

He also rejected the idea that problems had arisen because of the sharing of supervision between BaFin and the Bundesbank, the central bank. The institutions had co-operated well, he said.

Mr Sanio was sharply critical of rating agencies, whose assessments of some structured credits had clouded awareness of risks.