European Union regulators has approved German state guarantee of worth E7 billion to Dusseldorf-based IKB Deutsche Industriebank AG – reported Bloomberg. It was reported that the guarantee, along with a new restructuring plan for the bank, was essential to safeguard its liquidity and financial stability in Germany.
IKB, which concentrates on midsized firms, became the first victim of the US sub-prime crisis in the Germany as it lost E580 million, requiring a government backed lifeline. Subsequently, it was taken over by Dallas-based private equity company – Lone Star Funds last year, reported the newspaper.
In a statement, Neelie Kroes, competition commissioner, said: This aid would grant liquidity to the bank for the coming months, allowing it to sustain lending to the real economy.
The European Commission had said that it was not convinced by the earlier restructuring plan, under which the bank had already got financial aid. German authorities committed themselves to notify a revised restructuring plan, taking into account the changes in the economic climate, Mr. Kroes added.
