Ireland: Recapitalisation of Educational Building Society
Description
On 4 March 2010 the Irish authorities informed the Commission of their intention to undertake rescue measures in favor of Educational Building Society (EBS).
EBS is Ireland's largest building society and the eighth largest institution operating in Ireland. Building societies are mutual organizations which have no shareholders but instead are owned by their members, who are also their clients. Their objective is to collect deposits and provide loans. Profits are used to adapt interest rates to the advantage of the members, or are accumulated as reserves.
EBS will receive a total capital injection of up to EUR 875 million (an amount which could be reduced after assets are transferred to NAMA), split between two measures. The first measure will allow Ireland to gain control of EBS, while the payment of capital under the second measure will be staggered over 10 years and the exact amount will be subject to adjustments.
The Commission concluded that the measure contains state aid and gave the following assessment:
" The Commission observes that in this case State resources are involved as measures 1 and 2 are entirely financed by the State… The Commission finds that measure 1 and 2 are also likely to affect trade between Member States as EBS is competing on the Irish retail savings markets, the Irish mortgage lending markets and the Irish commercial lending markets." (par. 41 and 46 of the official letter from the EC to Ireland - Brussels, 2.6.2010 C(2010) 3541 final)
Article 107(3)(b) TFEU enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 107 (3)(b) by the Court of First Instance.
The Commission referred to its Communication on the financial crisis (Temporary Framework) and concluded that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 107 (1) TFEU, it is compatible with the internal market according to the 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: 30 Apr 2010
GTA Evaluation: Red
Source:
the official letter from the EC to Ireland - Brussels, 2.6.2010 C(2010) 3541 final - http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=...
Government Response:
- 356 reads
