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Germans sent Lehmans EUR300m on bust day; BANKING.

German state lender KfW has fired two board members over the transfer of about 300 million euros to Lehman Brothers on the day the US bank filed for bankruptcy, the finance and economy ministries said yesterday.

KfW's board of supervisory directors decided that Peter Fleischer and Detlef Leinberger would have to leave their posts with immediate effect, the ministries said in a statement.

The two board members had already been suspended.

KfW has said it mistakenly transferred the funds to Lehman to unwind a swap agreement, in which two counterparties agree to exchange one stream of cashflow against another stream.

The case made front-page news in Germany, with one newspaper calling KfW "Germany's dumbest bank".

It also put pressure on economy minister Michael Glos, chairman of KfW's board of supervisory directors, and finance minister Peer Steinbrueck, who is deputy chairman.

The ministries said the board backed management plans to examine KfW's risk management and business processes thoroughly.

Sources have said the German lender's total exposure to Lehman was 536 million euros, including the Lehman transfer.
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Sep 30, 2008
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