German bank eyes struggling rival: IKB

German bank eyes struggling rival
People against an IKB sign

German bank Bayerische Landesbank (BayernLB) has said it is contemplating buying part of its struggling rival, IKB Deutsche Industriebank.

IKB has been badly hit by the sub-prime crisis - needing three bailouts.

Its backers - including the government and the state-owned KFW bank have said that it should be sold.

BayernLB said it only was keen on the "good" part of IKB's loan book, and not those which have been hit by the sub-prime turmoil.

It has itself written off about 1.9bn euros ($3bn; £1.5bn) as a result of the global crisis that first stuck last summer.

And there is speculation that it will have to increase the size of its writedowns when it issues its results later this week.

Worthless assets

A spokesman said that BayernLB would be looking at IKB's books to determine whether to make an offer.

"We certainly consider ourselves to be in a position to participate in the bidding process [for IKB] otherwise we wouldn't be doing it," he said.

IKB has been given more than 8bn euros in bailouts after it lost billions on investments in assets backed by risky US home loans.

Like many other banks, IKB bought financial products backed by mortgages given to US homeowners with poor credit histories.

Many of those homeowners are now struggling to pay the interest on those loans.

That has left banks holding assets that are either worthless, or very difficult to value.