Development Bank Misplaces €6 Billion

KfW Picture Alliance
It's not the first time that KfW has messed up a transfer. Picture source: Picture alliance.

There could be embarrassing questions when the state-owned development bank KfW releases its annual results on Wednesday. On Friday, the bank acknowledged that it had mistakenly transferred a total of €6 billion, around $6.5 billion, to other banks.

The money was immediately repaid by the recipient banks, so there were no immediate financial losses. Nonetheless, the incident, previously reported by the news service Bloomberg, raises questions about the integrity of the bank’s IT systems, long seen as a pressing problem.

An error on this scale would be awkward for any financial institution, but it poses particular problems for KfW. In the public mind, the bank is still associated with an episode during the 2008 financial crisis when it mistakenly transferred €320 million to U.S. banking giant Lehman Brothers, which had gone spectacularly bankrupt some hours previously. The incident led to widespread mockery, with the bank dubbed “Germany’s stupidest bank” by the German tabloids.

“With sums on this scale, internal control systems should be triggered earlier and in a far more wide-ranging way.”

Eckhardt Rehberg, member of KfW supervisory board

KfW blamed the latest error on an IT systems failure, pointing the finger at an experienced programmer within the bank’s computer department. But observers point out that changes to bank IT systems are ordinarily thoroughly tested to avoid precisely this kind of event. “With sums on this scale, internal control systems should be triggered earlier and in a far more wide-ranging way,” Eckhardt Rehberg, a member of the bank’s supervisory board, and a conservative member of Germany’s parliament, told Handelsblatt.

KfW is a development bank, wholly owned by the German federal government and the country’s 16 states. With a capitalization of just under €500 billion, it is the country’s third-largest financial institution, focusing on housing development, export finance, and support for small and medium business. Although it does not compete with commercial banks, since last year it has been regulated by the German financial supervisory body, Bafin, on the same terms as other financial institutions.

As Handelsblatt recently reported, Bafin last year specifically identified the bank’s IT department as a weak spot, demanding that numerous failings be addressed. KfW has been attempting to renovate its creaking IT systems since at least 2013, but is said to have underestimated the complexity of the project.

Neither Bafin nor the Bundesbank, Germany’s central bank, would comment on the latest incident. KfW said it had “immediately instituted a detailed internal and external investigation of the causes.” The results would be presented to the supervisory board, said a spokesperson.


Elisabeth Atzler has been a banking correspondent of Handelsblatt since 2012. Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. To contact the authors:,

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