German banks not immune as crisis spreads
IRISH banks are not the only ones suffering in the financial crisis.
In Germany, where the economy has been expanding at breakneck speed this year, many small regional banks are also showing signs of stress.
Larger banks are also suffering although all but one, property lender Hypo, passed the recent European stress tests.
The state-controlled wholesale lender LBBW last week said it had marked down the value of its holdings in the sovereign debt of countries such as Ireland, Portugal, Greece and Spain by €650m, in the first six months of 2010, which lead to a €290m loss.
Write-downs on bonds from peripheral European countries also led another regional bank, Landesbank Berlin, to scrap profit forecasts for 2010 after previously forecasting growth.
Germany's landesbanks were forced to expand into risky investment banking activities after the 2005 European Commission ban on state guarantees.
These prevented the landesbanks from lending to traditional customers at razor-thin margins.
Germany's larger banks have also run into problems with property lender Hypo failing the European stress tests.
These banks endured poor results as banking income was hit following Greece's economic crisis, which rattled investors.