Kreditanstalt für Wiederaufbau, the state-owned German development bank, could take a hit of more than €5bn ($7.3bn) in losses stemming from its rescue investment in an off-balance sheet funding vehicle sponsored by stricken lender IKB Deutsche Industriebank.

The loss comes some six months after KfW and a consortium of German banks were forced to throw a €8bn credit line to IKB in mid-July to safeguard it from collapse after weeks when it had faced severe funding problems as a result of the liquidity crisis.