FRANKFURT, March 1 (Reuters) - Deutsche Bank has struck an out-of-court settlement with Loreley Financing, an investment vehicle used by German bank IKB to invest in securitised packages of debt called collateralised debt obligations, Deutsche Bank said on Thursday.
Germany's biggest lender declined to give financial details of the settlement.
Deutsche Bank created CDOs between 2002 and 2007 containing sub-prime loans which eventually turned sour, resulting in massive losses for investors including Loreley, IKB and IKB's majority shareholder KfW.
Sources familiar with the deal on Thursday said the settlement payment would be significantly lower than the $440 million sought by Loreley, after it bought CDOs shortly before the sub-prime mortgage market collapsed.
Separately, a source close to the bank said the settlement payment was already booked in Deutsche's fourth-quarter results. (Reporting by Philipp Halstrick, writing by Jonathan Gould)