Berlin - The finance minister of Saxony in former communist east Germany resigned Friday in the wake of a scandal over major losses linked to investments in US subprime home loans by a state-owned bank.
Horst Metz told a special session of the state legislature that he would leave his post September 30 over his role in the affair.
"I do not want to duck my responsibility," he said, calling his resignation a "personal decision."
Calls for Metz to resign had grown loader in recent days as it emerged that the only state-owned bank in east Germany, SachsenLB, had suffered far more losses from dicey investments in the United States than originally thought.
On the brink of bankruptcy, SachsenLB was bought recently by another state-owned bank, Landesbank Baden-Wuerttemberg (LBBW), in a white-knight rescue operation a week after the smaller bank was thrown a lifeline of 17.3 billion euros (23.6 billion dollars) by the German national savings bank.
Metz's resignation follows the decision of SachsenLB's chief executive Herbert Suess, who said Thursday he would be stepping down September 15.
SachsenLB developed severe liquidity problems, meaning it was unable to cover its liabilities, after losing money with investments linked to US subprime home loans made via an Irish subsidiary.
Subprime loans are mortgages for borrowers with poor credit history and are highly risky.
Critics blamed the Saxony state government for failing to notice the mounting debts until the bank was in real jeopardy.