UPDATE 1-Lone Star to get 90.8 pct of stricken bank IKB


(Adds details, share price indication)

FRANKFURT, Aug 21 (Reuters) - U.S. private equity group Lone Star [LS.UL] is to take a 90.8 percent stake in lender IKB , Germany's most prominent casualty of the subprime crisis.

German state bank KfW [KFW.UL], which had bailed out IKB, made the announcement in an invitation to a news conference to be held later on Thursday.

Financial sources told Reuters late on Wednesday that Lone Star had been chosen as the buyer by KfW's supervisory board.

Shares in IKB were indicated 26.9 percent higher at 0636 GMT according to premarket data from brokers. Germany's blue-chip DAX index was seen 0.9 percent lower.

The sale will close a painful chapter in German banking history. IKB has been rescued three times at a cost of more than 8 billion euros ($11.81 billion), mostly with the help of government-owned KfW.

Once a little-known lender to small German companies, IKB came to notice last year as Germany's first casualty of the U.S. subprime mortgage crisis, when billions of euros (dollars) of its investments turned sour.

The spiralling cost of the rescue and the use of taxpayers' money to bail out the bank have stoked political tensions as the government tried to sell the lender.

KfW supervisory board Chairman Michael Glos, who is also Germany's economy minister, told reporters in Berlin late on Wednesday that an agreement to sell IKB had been reached.

"Basically everything is within the target figures," he said.

Finance Minister Peer Steinbrueck, deputy chairman of KfW's supervisory board, has come under fire for his handling of the IKB crisis, which also led to the resignation of KfW's previous chief executive in April. (Reporting by Patricia Uhlig, Writing by Sylvia Westall; Editing by Paul Bolding)



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