The European Commission has opened an in-depth investigation into State support measures in favour of the German banks IKB and Sachsen LB. As a consequence of investments in US sub-prime markets, both banks ran into financial difficulties. During the summer of 2007, the State-owned bank Kreditanstalt für Wiederaufbau provided a risk shield of EUR 9 billion to IKB. A group from State-owned Landesbanken also granted liquidity assistance of EUR 17 billion to Sachsen LB. Without these and several subsequent measures the banks would not have been able to continue their business. The Commission will assess whether these measures constitute State aid and, if so, whether they are compatible with EU rules for rescuing and restructuring firms in difficulties. Interested parties may submit their comments to the Commission.
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Commission investigation into German banks caught in sub-prime market crisis
- McDermott Will & Emery
- Juan Gutiérrez
- European Union, Germany
- February 29 2008
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Sonja Sarantis
Legal Counsel
State Street Bank and Trust Company