The new owners of German bank IKB had harsh words on Wednesday for German officials following the sale of a lender that flirted with bankruptcy amid the international financial crisis. Karsten von Koeller, the head of US fund Lone Star's German unit, told the daily Die Zeit in an interview to appear Thursday that German Finance Minister Per Steinbrueck had initially floated a price of 800 million euros (1.18 billion dollars).
Steinbrueck is vice-president of IKB's supervisory board, but von Koeller said that price was not close to the true value of a company that specialises in loans to small- and medium-sized enterprises. The sum was floated "by political figures who had certainly not looked closely at the bank's financial situation," von Koeller said.
According to press reports, Texas-based Lone Star paid between 100-150 million euros for IKB, which had to be bailed out several times with a combination of public and private backing. An exact figure for the deal has not been released, and those close to the matter have said only that it was somewhere between 100-500 million euros.
IKB faced huge losses on investments connected with the US market for high risk, or subprime, mortgages, and required massive financial support, mainly by the development bank KfW, the German government's financial arm. KfW had initially bought a stake in IKB in 2001 to prevent a foreign investor from acquiring capital in the bank, postponing by seven years what finally took place this month.
Von Koeller said the market was now reclaiming its rights and added: "The true drama is that this cost taxpayers around 10 billion euros." Germany's liberal FDP party has called for a probe to determine the full cost of the IKB debacle.
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