Germany’s KfW Bank in €5bn money transfer error
KfW, a German government-owned development bank, which gained publicity for erroneously transferring more than €300 million to Lehman Brothers the day it filed for bankruptcy, has done it again, according to Bloomberg.
KfW mistakenly transferred more than €5 billion to four banks because of a technical glitch that repeated single payments multiple times, according to people familiar with the matter.
The total amount transferred was as high as about €6 billion, says one of the people, who like the others asked not to be identified because the matter is private. (Well, it was.)
“KfW has detected the system’s incorrect behaviour very early in the process, immediately mitigated the unwanted action and started the necessary process of analysing the causes,” the bank says in an emailed statement to Bloomberg. “The mistake was rapidly identified and eliminated, and the amounts overpaid were successfully demanded back. We regret that during works on the systems, this incident could happen due to human error owing to a configuration mistake.”
In this latest mishap, and according to a source that spoke to Bloomberg, KfW was told about its error by Germany’s Bundesbank, which said it had overdrawn its account there.
If you don’t remember the KfW/Lehman Brothers incident, then it was back in September 2008. At that time, the KfW “failed to refresh its counterparty check that would have prevented it from processing the regular transaction”, according to Bloomberg. The transfer became a political scandal in Germany, with newspaper Bild calling KfW “Germany’s dumbest bank”.
KfW is not alone for these kinds of glitches. In June 2015, Deutsche Bank’s foreign exchange unit erroneously sent $6 billion to a hedge fund client and recovered the sum a day later.