The fallout from the credit crisis spread on Monday when Financial Guaranty Insurance Company, the New York-based bond insurer, filed a lawsuit accusing IKB, the German bank, and its affiliates of a fraud that left it exposed to potential liabilities of $1.9bn.

In the complaint, filed in New York, FGIC alleged that IKB and its affiliates provided false and misleading information that convinced the bond insurer to assume billions of dollars of potential losses on one of IKB’s off-balance sheet special investment vehicles.