Page last updated at 14:34 GMT, Thursday, 21 August 2008 15:34 UK

Lone Star Funds to take over IKB

People against an IKB sign
IKB was bailed out by several lenders following sub-prime problems

US private equity firm Lone Star is to take over German lender IKB Deutsche Industriebank, according to KfW, the German firm's biggest shareholder.

State development bank KfW has not given details of its plan to sell its 90.8% stake but one source told Reuters it was worth about 100m euros (79m).

IKB was one of Europe's first firms to be hit by the US sub-prime crisis.

KfW and other firms intervened to stop IKB from going bankrupt in a rescue package worth several billion euros.

KfW has a 45.5% share in IKB but that is set to increase to 90.8% in an already-agreed deal.

Like other banks, IKB invested in financial products backed by mortgages given to US homeowners with poor credit histories.

IKB faced the threat of bankruptcy as it emerged that it had around $24bn in investments connected to high risk loans.

Once interest rates rose, many borrowers were unable to meet their monthly payments, thereby defaulting on their loans.

More details of the sale are expected to be given at a news conference later on Thursday.

Lone Star - which manages more than $13bn in assets - is reported to have beaten off competition from Swedish bank SEB and fellow US private equity group Ripplewood.




SEE ALSO
IKB in new sub-prime write downs
22 Jul 08 |  Business
Sub-prime crisis to cost IKB $1bn
03 Sep 07 |  Business
Q&A: Sub-prime lending
14 Mar 07 |  Business

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