Exclusive: Lone Star hires advisors for IKB sale as stress tests loom

Fri Jan 31, 2014 9:01am EST
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By Arno Schuetze

FRANKFURT (Reuters) - Private equity investor Lone Star LS.UL has hired Rothschild ROT.UL and Bank of America Merrill Lynch (BAC.N: Quote) as advisors for the planned sale of German corporate bank IKB IKBG.F, two people familiar with the transaction said.

The sale of one of the highest-profile German casualties of the financial crisis is likely to begin shortly, they said, as upcoming European bank health tests put pressure on Lone Star to find a financially robust home for the lender.

It is likely to spark the interest of banks hoping to expand business with medium-sized German companies. Potential suitors include BNP Paribas (BNPP.PA: Quote), Societe Generale (SOGN.PA: Quote), Santander (SAN.MC: Quote) or HSBC (HSBA.L: Quote), the people said.

"Lone Star has shown that it is ready to exit German banking assets now," said one person close to the sale.

Lone Star, IKB, Rothschild, Bank of America, BNP Paribas, Societe Generale, Santander and HSBC declined to comment.

U.S. investor Lone Star, which owns 91.5 percent of IKB, sold property lender Corealcredit RWBG.UL to Aareal Bank (ARLG.DE: Quote) in a 342-million-euro ($464 million) deal in December.

IKB was known before the financial crisis mainly as a lender to mid-sized German companies. It required several bailouts from development bank KfW KFW.UL and the German state after its off-balance sheet investment vehicles ran into funding problems in 2007.

Following the rescues, IKB was taken over by KfW, which sold it to Lone Star in August 2008 for 137 million euros.   Continued...

Picture shows the logo at the headquarters of the Deutsche Industriebank IKB in the western German city of Duesseldorf December 10, 2007. REUTERS/Wolfgang Rattay