German public banks eye stake in IKB

FRANKFURT Thu Sep 27, 2007 7:37am EDT

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FRANKFURT (Reuters) - Germany's public-sector banks would be interested in buying the German government's 38 percent stake in subprime victim lender IKB IKBG.DE, the head of the country's savings banks association DSGV said in an interview.

"If the stake in IKB comes up for sale, there will be interest from the group," DSGV chief Heinrich Haasis told Reuters, adding that a buyer from the public-sector banks such as one of the country's regional landesbanks was better than a non-public sector alternative.

IKB's shares turned positive on the news and were up 0.8 percent at 13.97 euros by 6:45 a.m. EDT, while European banking shares rose 1.7 percent .SX7P.

IKB ran into trouble over its investments linked to the market for risky U.S. mortgages and had to be propped up through a 3.5 billion euro ($5 billion) rescue by the country's banks.

Germany's government is thinking about selling the IKB stake that it holds through state development bank KfW KFW.UL, which itself put up more than 8 billion euros in liquidity guarantees to bolster IKB.

IKB's list of medium-sized German corporate customers would make it of interest to other banks should it eventually be sold.

Commerzbank (CBKG.DE) Chief Executive Klaus-Peter Mueller said he would look at IKB if it came up for sale, while cooperative banks DZ Bank and WGZ bank have also said in the past that they could be interested.

Germany's savings banks earlier this year clubbed together more than 5 billion euros to secure control of public lender Landesbank Berlin BEBG.DE, keeping it from falling into the hands of a commercial-bank bidder.

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