KfW, the German state development bank that is leading a rescue of IKB Deutsche Industriebank after it suffered sub-prime losses, has agreed to cover the German lender's remaining risk, taking the bail-out package to over €6bn ($8.8bn).

The decision to cover the $520m in risk resulting from Havenrock, an investment vehicle sponsored by IKB, came after a meeting between KfW, Bundesbank, the German central bank and BaFin, the financial services regulator yesterday.