THE CHAIRMAN of Germany's crisis-hit Industriebank (IKB) has rejected responsibility for subprime deals at the bank that forced a €8.5 billion government bailout.

The future of the bank hung in the balance at an ill-tempered annual general meeting in Düsseldorf yesterday amid reports of disagreement between Berlin and its KfW state investment bank over whether to keep propping up IKB, 43 per cent owned by KfW.

"We had no chance to recognise the risks and to avoid the life-threatening crisis," said Ulrich Hartmann, head of the IKB supervisory board.

Mr Hartmann said the management board, in its reports to the supervisory board, had played down subprime risks in its investment portfolio until July last year, when it was already too late. It also failed to disclose potential losses to Germany's financial regulator, he said.

All leading managers were fired last year after the full extent of its subprime exposure was revealed.

The DSW association, representing private shareholders, was dismissive of Mr Hartmann's explanation yesterday.

"It seems there was not a soul in the entire bank who had a clue about risk management," said DSW head Hans-Richard Schmitz. "IKB shareholders have been left with a shattered bank and no one wants to take responsibility."

Pressure is growing on the bank from the outside.

Ingrid Matthäus-Maier, chief executive of the state-owned KfW and IKB's largest shareholder, is reportedly opposed to the option of a fourth state cash injection, claiming that the €8.5 million it has provided so far has exhausted the bank's reserves.

The finance ministry wants to support the bank, fearing even worse financial consequences from a collapse.

Meanwhile, leading IKB managers dismissed as "groundless" the claim by a New York bond insurer that misleading risk information from the bank has left it facing losses of $1.88 billion.