State-owned KfW was dubbed “Germany’s dumbest bank” after mistakenly transferring €350 million to Lehman Brothers prior to its collapse.

After mistakenly transferring €350 million to Lehman Brothers just hours before its collapse on Monday 15 September, German bank KfW has suspended those members of the Board responsible. 

State-owned KfW, dubbed “Germany’s dumbest bank” by newspaper Bild, transferred the money, amounting to more than £275m, just hours before the troubled American financial institution declared insolvency. 

The automated transfer was never followed by the agreed payment of $500m in return as other banks were hastily withdrawing their money out of Lehmans.

The German bank has now hired a Frankfurt-based law firm to probe the possibilities of initiating criminal charges against its two board members who are seen as responsible for not preventing the transfer.

Dr. Peter Fleischer and Detlef Leinberger have been suspended on full salary from their functions with immediate effect pending final clarification of the incident.

The Managing Board also suspended the Senior Vice President in charge of the Risk Controlling Department, Rainer Hartje.

KfW is a state lender which normally offers money to small and medium-sized German businesses; both politicians and business leaders sit on the administrative board.

KfW said its exposure to the Lehman failure totalled €536 million– it hopes to recoup at least 50% of the missing money.