Germany: Restructuring of Sparkasse Köln/Bonn
On 21 October 2009 Germany notified the measures related to the recapitalization of Sparkasse Köln/Bonn. On 11 February 2010 the German authorities submitted a restructuring plan.
Sparkasse KölnBonn is a German savings bank. It was created in its current form in 2005 as a result of the merger of Stadtsparkasse Köln and Sparkasse Bonn. At the end of 2008 Sparkasse KölnBonn was the second largest savings bank in Germany with a balance sheet of EUR 31 billion.
Rgarding the aid measures, the capital of Sparkasse KölnBonn was strengthened by a total of EUR 650 million (i) by the issuance of certificates of participation (Genussrechte) at the end of 2008 and (ii) by a silent participation (Stille Einlage) in the beginning of 2009.
The restructuring plan submitted in 2010 includes the following measures:
1) Sparkasse KölnBonn will reduce its largest credit exposures by limiting the credit lines, requesting additional collateral or transferring risks to other credit institutions.
2) Sparkasse KölnBonn has already decreased its proprietary trading portfolio from originally EUR 550 million to currently EUR [20-23] million, which will be further reduced to 0. The bank will cease all proprietary trading activities in the future and considers giving up its status as trading book institute, thus accounting all remaining limited trading activities in the banking book.
3) the Bank decided to completely sell or run off those engagements by 2014. Sparkasse KölnBonn reduced its SAA investment by half in March 2008 in order to limit its exposure to equities. Further divestments took place in 2009, resulting in the reduction of the SAA portfolio to EUR 468 million as per 30 September 2009. The impact of the remaining ABS exposure (nominally EUR 970 million as per 30 September 2009) on the Sparkasse KölnBonn’s accounts shall be absorbed by provisioning and hedging in 2010. Finally in [2012-2014] the whole remaining portfolio is to be sold.
4) Sparkasse KölnBonn has started implementing a comprehensive cost-cutting programme, including staff reduction, internal processes optimisation and closure of 22 out of 131 existing branches by mid 2011. As a result, its administrative expenses will be gradually reduced by [5-8] % by 2014.
The EC gave the following assessment:
"In the view of the above, the Commission confirms the conclusion reached in the opening Decision that the recapitalisation measures in favour of Sparkasse KölnBonn constitute State aid within the meaning of Article 107 (1) TFEU.
The Commission furthermore notes that the rescue aid measures have been converted into restructuring aid which continues to constitute an advantage for the Bank. The measures allowed the Bank to get financing in a situation where it was unable to raise capital on the market, especially in the financial and economic crisis. This gives an economic advantage to the Bank and strengthens its position compared to that of its competitors in Germany and other Member States that are not benefitting from the same support. The measures must therefore be regarded as liable to distort competition and affect trade between Member States." (par. 65-66 of the letter form the EC to Germany - Brussels, 29.09.2010 C (2010) 6470 final)
The Commission concludes that the restructuring measures are apt to enable Sparkasse KölnBonn to restore its long-term viability, sufficient in respect to burden-sharing and appropriate and proportional to offset the market-distorting effects of the aid measures in question.
The Commission therefore considers that the submitted restructuring plan fulfils the criteria of the Restructuring Communication and the restructuring measures can therefore be considered compatible with the internal market pursuant to Article 107(3)(b) TFEU. The capital injection measures can therefore be approved in accordance with the restructuring plan. (par. 103 of the letter)
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:
|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 of inception: 22 Dec 2008
GTA Evaluation: Red
the letter form the EC to Germany - Brussels, 29.09.2010 C (2010) 6470 final. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >