BaFin:No Reason For Special German Bk Audit On US Loan Woes

August 08, 2007, 1:12 a.m. EDT 1 Min Read

FRANKFURT (Dow Jones)--German financial services regulator BaFin doesn't seeany grounds for a special audit of German banks on the current mortgage loanwoes in the U.S., a BaFin spokeswoman told Dow Jones Newswires Wednesday.

"We don't see any reason for further special audits or a huge survey amongGerman banks," BaFin spokeswoman Sabine Reimer said in response to a questionwhether concerns over the most recent near bankruptcy of American Home MortgageInvestment Corp., the 10th-largest mortgage lender in the U.S., could spill overfurther to German banks.

American Home teetered on the brink of bankruptcy Tuesday after saying itcan't pay its creditors, potentially becoming the first big lender outside thesubprime mortgage business to go bust.

Earlier this week, recent woes about faltering subprime loans to U.S. homeowners with a poor credit history spilled over to German banks.

In the early hours of Monday, Germany's IKB Deutsche Industriebank AG (IKB.XE)issued a profit warning, saying it would no longer reach its fiscal 2007/2008operating profit target of EUR280 million. The firm said it expected its profitto be "significantly lower," although it didn't give details.

Tuesday, German development bank KfW said it will assume financial obligationsof around EUR8.1 billion from IKB after its Rhineland Funding investment vehiclewas hit by the subprime crisis, according to a KfW filing to the U.S. Securitiesand Exchange Commission.

UniCredit SpA's (UC.MI) German unit HVB Group AG (HVM.XE) "doesn't have anybusiness relations with banks that specialize in U.S. home loans and doesn'titself have any exposure to the sector - therefore we don't need to make anyprovisions for that," said HVB spokesman Hartmut Pfeifer.

A DZ-Bank spokeswoman also said the bank "isn't affected by the issue."

Spokesmen with Allianz SE's (AZ) Dresdner Bank and Deutsche Postbank AG (DPB.XE) declined to comment.

Regulator Web site: www.bafin.d

-By Christian Streckert and Ulrike Dauer, Dow Jones Newswires; +49 69 29725500; ulrike dauer@dowjones.com