21 October 2008

Commission approves restructuring of IKB

The Commission approved the €9 billion restructuring package, for German bank IKB. In the context of the restructuring, the bank was sold to the US investment fund Lone Star in August 2008.

The Commission approved the €9 billion restructuring package, for German bank IKB. In the context of the restructuring, the bank was sold to the US investment fund Lone Star in August 2008. The package will allow for the restructuring of the bank, while the significant scaling back of IKB's activities will limit the distortion of competition created by the state support, the Commission finds.

 

The measures in favour of IKB included capital injections and risk shields provided jointly by KfW and three German banking associations, as well as liquidity facilities provided by KfW. In line with the restructuring plan, IKB has been sold to the US investment fund Lone Star in an open, non-discriminatory and unconditional tender completed in August 2008.

 

The Commission found all restructuring measures to contain elements of state aid, as no market economy investor would have carried them out in the circumstances. Subsequently, the Commission assessed their compatibility under the EU rescue and restructuring guidelines.

 

The Commission's investigation found that the restructuring plan was capable of restoring the bank's long-term viability by refocusing its activity on core business, abandoning loss making activities and improving cost and risk efficiency. In addition, the sale to Lone Star will allow for a positive economic development of IKB. Moreover, the Commission considered that Lone Star's capital injection and the funding provided by the banking associations constitute a significant own contribution to the restructuring. Finally, various measures, in particular a significant reduction of IKB's activities, limit the distortions on the market created by the economic advantage it received through the state support.

 

Press release

 

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