Business & Finance

Bargepole still required for IKB

LONDON : The German commercial lender was one of the first victims of the credit crunch. After shrinking the balance she

Published July 7, 2011 Updated July 7, 2011 02:33pm

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By Muhammad Iqbal

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Lone Star, the private equity firm, is in exclusive talks with BNP Paribas regarding the sale of its 91 percent stake in German commercial lender IKB, FT Deutschland reported on July 6.

Lone Star, which bought its stake for 137 million euros in August 2008, put its IKB shareholding up for sale in October 2010.

IKB received a 3.5 billion euro capital injection from its owners in August 2007, after nearly collapsing due to its exposure to a structured investment vehicle that had invested heavily in securities backed by sub-prime mortgages.

IKB also has 10 billion euros of debt guaranteed by SoFFin, Germany's bailout fund. This debt started to come due in April 2011 and will continue to mature in trenches ranging from 0.9 billion euros to 2 billion euros until February 2015.

Moody's downgraded IKB to Ba2 from Baa3 on 19 April. The ratings agency said this was partly due to Germany's plan to make bank creditors share in future losses, and partly because it deemed IKB to have a "weak financial profile and limited financial flexibility".

IKB shares rose 5.9 percent to 0.72 euros on July 7. BNP and IKB declined to comment, as did Perella Weinberg, which is advising Lone Star.

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