German banks rallied to the rescue of troubled lender IKB for the second time in just four months today.
The banks agreed to cover another $520 million in risk from an IKB investment vehicle. The move to cover all potential losses from IKB's Havenrock arm boosts the cost of the government-led bailout that has already cost €3.5 billion.
State development bank KfW said today members of a banking pool sheltering IKB had agreed at a meeting yesterday to take the additional step. It had not yet been decided who from the pool would cover the risks.
IKB nearly collapsed this year under the strain of losses from investments in risky US home loans and was rescued in an effort spearheaded by KfW, which holds a 38 per cent stake in IKB.
IKB stock reversed losses on the news and were up 4.4 per cent at €8.40 by 9.20am. They still trade at only a quarter of the level they reached in February.
IKB had earlier delayed again the release of its first-half results while it consolidates another offshore investment arm, Rhineland Funding, whose soured subprime assets triggered the original rescue.