Austria: Restructuring of Österreichische Volksbanken- AG
Description
In April 2009 Österreichische Volksbanken-AG (ÖVAG), the then fourth largest bank in Austria, was recapitalised with EUR 1 billion under the Austrian bank support scheme. Further, it placed three issues of State guaranteed debt instruments in the market, each of EUR 1 billion. In November 2010, Austria submitted ÖVAG's restructuring plan to the Commission. The restructuring plan aimed at a more focused bank and therefore involved a significant reduction of the bank's size through abandonment or downsizing of many non-core activities.
ÖVAG is the central institute of Austria's Volksbanks (local credit co-operatives) providing them with centralized back-office services, liquidity management and financial products. Volksbanks are universal banks with local to regional scope of activities. ÖVAG operates in five business segments: corporate banking, retail banking, real estate, financial markets and banking book/other operations. ÖVAG abandoned public finance and infrastructure financing in 2008 when it sold its stake in Kommunalkredit Austria AG ("KA") to the Republic of Austria for the nominal amount of EUR 1.
The EC gave the following assessment:
“As stated in Article 107(3)(b) TFEU any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by
favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market. The Commission recalls that it has already established in the decisions on the Austrian bank support scheme that liquidity guarantees and capital injections given under the scheme constitute aid. That evaluation is not disputed by Austria.” (par. 47-48 of the letter from the EC to Austria - Brussels, 9.12.2011 C (2011) 9227 final)
The EC assessment related to the Austrian bank support scheme (State aid N 557/2008):
“The guarantees for new liabilities and the recapitalisation measures will enable beneficiaries to acquire the necessary capital and liquidity on more favourable terms than would have been possible under the conditions prevailing in the financial markets. Inasmuch as this will confer an economic advantage on beneficiaries and strengthen their position vis-à-vis their competitors in Austria and in other Member States, the measures at issue will distort competition and affect trade between Member States. The resulting advantage will be a selective one in that it will benefit only beneficiaries under the scheme and will be financed through state resources.” (par. 53 from the letter from the EC to Austria - Brussels, 9 December 2008 C(2008) 8408 final)
The EC concluded that, on the basis of the restructuring plan submitted in November 2010, serious doubts remain whether ÖVAG will be able to restore its long-term viability, whether sufficient burden-sharing is achieved and whether adequate measures are taken to limit distortions of competition. On that basis, the Commission has doubts whether the restructuring aid can be considered compatible with the internal market pursuant to Article 107(3)(b) TFEU.
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
Any Evidence-Based Deliberation:
| Question | Result |
|---|---|
| Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations? | |
| Is there any evidence that alternatives to the proposed measure were considered? | |
| Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government? | |
| Was such evidence identified? | |
| Is such evidence publicly available? | |
| Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives? | |
| Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken? | |
| Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory? | |
| Did the government state its intention to review the measure within one year of implementation? |
Date Discovered:
Implemented: Yes
Date of inception: 9 Nov 2010
GTA Evaluation: Red
Source:
the letter from the EC to Austria - Brussels, 9.12.2011 C (2011) 9227 final. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >
the letter from the EC to Austria - Brussels, 9 December 2008 C(2008) 8408 final. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >
Government Response:
- 359 reads
