After days of secret negotiations, the fate of IKB, Germany's worst-hit bank in the US subprime loans crisis, is likely to be decided at a board meeting at its parent Wednesday, according to dpa. The federal government bank, KfW, which owns 38 per cent of IKB, has been left holding the line after other shareholders said their funds had been exhausted. KfW is considering sacrificing some of its "crown jewels" to rescue IKB, sources close to the negotiations in Berlin said Tuesday. KfW might raise a convertible loan, repayable with 1 billion euros' (1.45 billion dollars) worth of shares in German mail carrier Deutsche Post. Currently KfW owns 31 per cent of the former German postal monopoly. The sources said this option would be conditional on commercial banks such as Deutsche Bank posting a further 1 billion euros as a voluntary investment in averting an IKB crash and in protecting German financial prestige. The sources said another option was a direct bailout by the federal government. The newspaper Die Welt was to publish Wednesday remarks by German Finance Minister Peer Steinbrueck warning that there were limits. "It's not easy to weigh up the harm from an insolvency against throwing good money in for further stability," he said.
