BANKING SECURITY

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.

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