Berlin  - The head of a German public bank, KfW, has described how staff frantically snatched 20 billion euros' worth of planned swaps away from Lehman Brothers on Monday last week, the day the US investment bank failed.

Chief executive Ulrich Schroeder, 56, was testifying behind closed doors to a parliamentary inquiry in Berlin, but participants leaked details to the press.

The legislators were investigating how one future-trading settlement went awry, with KfW transferring cash to Lehman and receiving nothing in return a week ago.

KfW has suspended two men on its seven-member executive board because of the mistake, which it said caused an immediate loss of 350 million euros (511 million dollars).

Schroeder said the erroneous transfer was the one which could not be undone on a day when KfW staff switched 174 swaps and settlements away from Lehman to safe banks.

KfW administers the federal government's soft-loans programmes for home-owners, students and industry and also acts as a money broker and an investment bank.

Last week's loss prompted questions about whether other executives and officials failed to run KfW properly.

HSH Nordbank, a troubled German public-owned bank, meanwhile confirmed that the world financial crisis had wiped 500 million euros (700 million dollars) off the value of its assets.

The Hamburg-based bank said the third-quarter write-down would include 120 million euros that vanished in last week's collapse of Wall Street investment banking firm Lehman Brothers.

After a 2007 write-down of 1.3 billion euros and a first-half-2008 write-down of 511 million euros, the new setback increases the HSH Nordbank loss to 2.3 billion euros.

The bank is controlled by two German states, Hamburg and Schleswig-Holstein.

A bank spokesman stressed that the losses were on paper only and that it was conceivable some assets could recover. (dpa)