Brussels, 21/10/2008 (Agence Europe) - On Tuesday 21 October, the European Commission announced that it was approving the restructuring package for German bank IKB. €9 billion in aid from the German authorities was used to sell the bank off to the US investment fund Lone Star. Competition Commissioner Neelie Kroes said: “The sale of IKB, important structural changes and significant reduction of activities provide a very comprehensive package and meet the requirements for a positive decision. This decision demonstrates once again that the EU's state aid rules provide an appropriate framework to allow state support for the viable restructuring of banks and other companies while minimising distortions of competition…long term viability, aid limited to the minimum and limited distortions of competition”.
Berlin welcomed the Commission's approval but was not surprised by the result. The authorities, according to a finance ministry spokesperson, had done everything to the letter with regard to the state aid requirements in Community law. Aid for restructuring, as in this case, has to be notified to the Commission in the six months following its implementation.
After running into difficulties provoked by huge portfolio investments related to US-subprime mortgages in July 2007, IKB benefited from two general guarantees, capital injections and liquidity facilities from the treasury. As part of restructuring, the bank was sold to the Lone Star bank in August 2008. The Commission's positive decision wraps up the probe opened in February 2008. (C.D./transl.rh)