Politicians fret as IKB gets more taxpayer cash

By Jonathan Gould

FRANKFURT (Reuters) - Stricken German lender IKB (IKBG.DE: Quote, Profile, Research, Stock Buzz) got another $700 million of taxpayers' cash to bolster itself amid more subprime writedowns, exasperating politicians who said it should get no more state help.

Unable to sell billions of euros of risky financial assets given market jitters, IKB said on Thursday it would get 450 million euros ($707 million) in fresh loans from its state owners to offset mounting losses on investments.

Financial sources close to the situation said the aborted asset auction -- which one said drew "rock-bottom prices for this toxic waste" -- could disrupt Berlin's plans to sell IKB.

State development bank KFW [KFW.UL], which holds the government's 43 percent stake, opened IKB's books to interested bidders earlier this week.

Once a little-known lender to medium-sized companies, IKB shot to fame last year as Germany's first subprime casualty when its investments in the market for risky U.S. mortgages soured.

The affair has become an embarrassment for Germany as a banking centre, and the government has promised to do all it could to save the bank from collapse.

KFW has led three rescue packages worth more than 8 billion euros, with the cash injection unveiled on Thursday practically using up the funds agreed in the most recent bail-out.

Politicians expressed anger over the spiralling cost of propping up the bank.