KfW Bankengruppe signs agreement with Lone Star to sell its shares in IKB

Frankfurt (ots) -

- Major milestone toward ending a thus far unique rescue mission
to stabilise the financial market and the German economy
- Continued existence of the SME bank IKB assured
- Lone Star announces its intention to ensure IKB's existence

At its meeting as at 20 August the Executive Committee of the
Board of Supervisory Directors of KfW Bankengruppe decided to
recommend to KfW's Board of Supervisory Directors to sell KfW's
shares in IKB to Lone Star. The Managing Board of KfW Bankengruppe
and Lone Star today signed the corresponding purchase agreement in
Frankfurt am Main. According to the agreement, Lone Star will
purchase all of KfW's holdings in IKB of approx. 90.8%. KfW
Bankengruppe has thus reached the crucial milestone for the end of
the IKB rescue mission and the sale of its shares in IKB Deutsche
Industriebank AG to a private investor.

The selling process including the selection of the buyer was
carried out by KfW in consultation with its Executive Committee. The
sale still needs to be approved by KfW's Board of Supervisory
Directors and by others including BaFin, the German Federal Financial
Supervisory Authority, and the European Commission. The closing of
the agreement is expected by October 2008.

In the purchase agreement signed today KfW was able to achieve an
adequate, positive purchase price and to reach an agreement on
sharing certain portfolio risks and risks of legal action. Among
other things, KfW will acquire a smaller share of IKB's on-balance
portfolio than originally planned. Lone Star will also provide IKB
with additional equity. Both contracting parties agreed to keep
further details on the purchase agreement confidential.

As at 31 December 2007 the overall charge from the IKB crisis that
was posted in KfW's balance sheet added up to EUR 7.2 billion. KfW
will post additional charges when the transaction is completed, yet a
current valuation puts their total at less than 10% of the above
stated costs arising from the rescue measures.

Wolfgang Kroh, Speaker of the Managing Board of KfW Bankengruppe,
underscored that the solution that has now been found meets the key
objectives of the IKB rescue efforts. A collapse of IKB was prevented
and IKB will retain its role as a bank for small and medium-sized
enterprises, the Mittelstand. Germany's financial market has been
stabilised and major damage to the German economy has been averted.
"In order to attain the goals of the IKB rescue mission, KfW took on
an extraordinarily heavy burden, but one that is not too heavy to
handle. We remain on solid financial footing. What is important is
that we have now closed the chapter on IKB's rescue. We do not face
any more unforeseeable risks with regard to IKB. We can now go back
to concentrating fully on our work as a promotional bank", said Kroh.
"The decision by KfW's Executive Committee to accept our offer marks
a great success for Lone Star. We look forward to the task at hand -
investing capital, expertise, time and all our efforts in order to
put IKB back on a sustainable course of long-term value added. Lone
Star offers the basis for implementing the strategy of strengthening
IKB as a leading provider of financial solutions for the German
Mittelstand", commented Bruno Scherrer, Senior Managing Director and
Head of European Investments of Lone Star.

Dr Günther Bräunig, CEO of IKB Deutsche Industriebank AG, is
pleased that the selling process has come to a successful close. For
IKB, its staff and its customers, a long period of uncertainty has
now come to an end. "Having a new owner, Lone Star, gives the bank a
fresh start and lends new dynamism to the business model of a
commercial bank that targets the Mittelstand - a model that is so
important in Germany", said Bräunig.

N.B.: The statement by the Speaker of the Managing Board of KfW
Bankengruppe, Wolfgang Kroh, is available for download from
www.kfw.de

Background: Chronology of KfW's shareholdings in IKB Deutsche
Industriebank AG, Düsseldorf

1985: KfW initially assumes a stake in IKB of approx. 1% at the
request of the German Government because Stiftung Industrieforschung
is unable to exercise its subscription rights during a capital
increase.

2001: KfW purchases the total share package of 33.2% being offered
for sale by Allianz and Munich Re. The aim is to maintain IKB's role
as a key provider of SME finance. The purchase is passed unanimously
at the end of 2001 by both KfW's Managing Board and its Board of
Supervisory Directors.

2003: In connection with its merger with DtA, KfW increases its
stake by another 3.6% which had been in DtA's portfolio.

2008: As at 30 June 2008 KfW's holdings in IKB are at around
45.5%. A capital increase in August 2008 increases KfW's shares in
IKB to approx. 90.8%, and, subject to approval by various bodies and
institutions, these shares are now being sold to Lone Star as per an
agreement dated 21 August 2008.

Originaltext: KfW
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