The European Commission has announced its approval, under EC Treaty State aid rules, of a restructuring package for German bank IKB Deutsche Industriebank AG. In 2007, Germany’s State-owned development bank, Kreditansstalt für Wiederaufbau (KfW) and three German banking associations granted a total of EUR 9 billion in State aid to IKB. The measures in favour of IKB included capital injections, risk shields and liquidity facilities. In line with the restructuring plan, IKB was sold to the U.S. investment fund Lone Star in an open, non-discriminatory and unconditional tender. The Commission questioned this restructuring plan under EU State aid rules. Under these rules, State aid to a company in distress is allowed, but only if it restores that company to long-term viability, including by making cuts in its activities, and if it is accompanied by a major investment made by the rescued company itself.
The Commission's investigation concluded that the restructuring plan was capable of restoring the bank's long-term viability by refocusing its activity on core business, abandoning loss-making activities and improving cost and risk efficiency. In addition, the sale to Lone Star will allow for positive economic development of IKB. Moreover, the Commission considered that Lone Star's capital injection and the funding provided by the banking associations constitute a significant contribution to its own restructuring. Finally, various measures, in particular a significant reduction of IKB's activities, limit the distortions on the market created by the economic advantage it received through the State support.