German bank IKB, the biggest German casualty in the U.S. subprime crisis, has been taken over by an American private equity group. Financial details were not disclosed.
US private equity group Lone Star is to take over IKB, the German bank rescued by the state development bank KfW after collapsing because of the subprime mortgage crisis, KfW said Thursday.
Lone Star is to buy KfW's 91 percent stake in IKB. Financial details were not disclosed. Further details were due at a news conference in Frankfurt later on Thursday.
IKB, a specialist in loans to small- and medium-sized business, invested heavily in securities tied to high risk subprime mortgages in the United States.
When US homeowners began defaulting on these home loans, these securities plunged in value and cost banks around the world hundreds of billions of dollars as they wrote off their investments.
In Germany, Europe's biggest economy, the first and biggest casualty was IKB. To prevent it going bankrupt it was bailed out to the tune of several billion euros gathered by the government, KfW and private German lenders.
Lone Star saw off other bids from Swedish bank SEB and fellow US private equity group Ripplewood, sources said. Two state-owned German banks, BayernLB and WestLB, were also interested but withdrew from the bidding.
Date created : 2008-08-21