KAS BANK exposure to Madoff fraud

Through one of its clients, KAS BANK has exposure to underlying investments as a result of the large-scale fraud involving Bernard L. Madoff Investment Securities LLC. A material write-down of these investments could result in an unsecured claim. The extent of the potential loss cannot yet be established precisely, but will not exceed EUR 9 million net. To the best of our knowledge, there is no further exposure via other parties related to KAS BANK.

KAS BANK has no direct relations to Bernard L. Madoff Investment Securities LLC in stocks or bonds and has no direct trading relationships with Bernard L. Madoff Investment Securities LLC or businesses related to that organisation.

The indirect exposure to these investment funds will have no material effect on KAS BANK’s capital adequacy, which will remain well above the target of 12.5% for Tier 1 capital. KAS BANK is doing everything possible to minimise the loss and will take legal action where appropriate to secure its own position.

Reflecting the above exposure and the previously announced loss on Lehman Brothers, rating agency Standard & Poor’s has lowered its long-term rating of KAS BANK from ‘A’ to ‘A-’ and its short-term rating from ‘A-1’ to ‘A-2’. The outlook remains ‘stable’.