UPDATE 1-Subprime hits BayernLB with nearly 2 bln euros
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FRANKFURT, Feb 13 (Reuters) - The subprime storm rattled one of Germany's biggest state banks on Wednesday when BayernLB revealed that the crisis would cost it almost 2 billion euros ($2.9 billion).
It is the latest German bank to stumble under a hail of subprime writedowns.
BayernLB announced that its profit last year would be reduced by 600 million euros, with a further 1.3 billion euros of writedowns, to be paid for out of its capital.
The BayernLB news came as Germany's finance minister scrambled to organise a third rescue for another subprime casualty, IKB (IKBG.DE), and hot on the heels of a rescue of BayernLB's fellow state-backed regional lender WestLB.
BayernLB, which said on Wednesday that it would still make an operating profit of 1 billion euros despite the hit, dismissed the idea that it needed to raise further capital from its owners.
The credit crisis, which started when U.S. home owners were squeezed by falling property prices and rising interest rates, has rocked confidence in the global economy.
Europe's biggest economy has taken an especially hard beating from credit market turbulence and Germany's regional state-backed Landesbanks such as WestLB and BayernLB have been badly hit.
Struggling after the abolition of government guarantees that had made it cheaper for them to borrow, many seized on the booming market in securitised debt to bolster profit only to run into trouble when credit markets seized up.
To read a story about a new rescue for subprime-hit IKB, double click on [ID:nL13897684]
(Editing by Paul Bolding)
