Lone Star Equity Buys 90.8 Percent Of German Bank Beset By Subprime Loans

August 21, 2008 3:28 p.m. EST

Berlin, Germany (AHN) - The Lone Star Equity Group, a Dallas-based firm, purchased a majority stake in IKB Deutsche Industriebank, Germany's first and most prominent victim of the subprime mortgage crisis.

Lone Star bought 90.8 percent of IKB, which specializes in lending to small and medium-sized enterprises. As of Thursday, the state-owned bank KfW sold its shares in IKB to Lone Star, but the amount was not disclosed.

Following the news of the sale, IKB's stock price went up by more than 10 percent on Thursday.

Over $14.8 billion (10 billion euro) was extended by KfW to IKB in 2007 when IKB was heavily battered by subprime mortgage loan losses. Its financial collapse led to the firing of four IKB officials, including chief executive officer Stefan Ortseifen.

IKB was probed by German prosecutors in April for insider trading.