US group buys German subprime casualty

0 Comments | AFP, August, 2008

BERLIN (AFP) — US private equity group Lone Star is to take over IKB, the German bank rescued by state development bank KfW after falling victim to the subprime mortgage meltdown, KfW said Thursday.

The sale price for KfW's 91 percent stake in IKB was not disclosed with KfW saying only that it was a "low three digit million euro amount" -- meaning presumably anything between 100-300 million euros (150-450 million dollars).

IKB, a specialist in loans to small- and medium-sized business, invested heavily in securities tied to high risk subprime mortgages in the United States.

When US homeowners began defaulting on these home loans, these securities plunged in value and cost banks around the world hundreds of billions of dollars as they wrote off their...