German Government's Aid To Banks Draws Scrutiny

Law360, New York (February 27, 2008, 12:00 AM EST) -- The European Commission opened an inquiry Wednesday to determine whether a German state-owned bank violated European Union rules by making billion-dollar payments to two private banks to rescue them from losses on their investments in American subprime markets.

Without the payments from government-run Kreditanstalt fur Wiederaufbau, German banks IKB Deutsche Industriebank AG and Landesbank Sachsen Gironzentrale would likely have been forced out of business last summer, the EC said.

The investigation will examine whether the payments conform to EU rules for rescuing and restructuring companies or...
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