Spain: Recapitalisation of the CAM Group
On 22 July 2011, the Spain notified to the Commission its intention to replace the governing bodies of CAM and Banco CAM and provide them with a capital injection and liquidity support through the Fondo de Restructuración Ordenada Bancaria (FROB).
CAM is a Spanish saving bank ("caja de ahorros"). Cajas de ahorros are credit institutions that have no shareholders, but instead are governed by their members. CAM operates mainly in the regions of Valenciana and in Murcia. The CAM Group presents material weaknesses that threaten its solvency and future viability. In particular, it shows: a) liquidity constraints, b) increased asset impairments, c) a decrease in profitability, d) low efficiency levels and e) a lack of trust in the future of the group following the failure of the Banco Base project. It has for consequence that it failed the 2011 EU wide stress test exercise run by the European Banking Authority.
CAM's failure to meet regulatory capital requirements has triggered the need for a recapitalisation, in order to achieve the 10% risk-weighted assets solvency ratio required by Spanish legislation.
The recapitalisation will be achieved through issuance of EUR 2'800 million of ordinary shares by Banco CAM. Preliminary estimates indicate that the FROB will effectively take control of the Banco CAM.
In addition, in order to meet the expected liquidity needs of the CAM Group, together
with the aforementioned capital injection, the FROB will grant Banco CAM a EUR 3'000 million liquidity facility.
The commission found that the measure constitutes State aid within the meaning of Article 107 (1) TFEU and gave the following assessment:
“The Commission finds that the measures distort competition as they allow the CAM Group to obtain the capital and liquidity necessary to avoid technical insolvency and its exit from the market.
The Commission finds that the measures are also likely to affect trade between Member States as the CAM Group competes on the Spanish retail savings markets, the Spanish mortgage lending markets and the Spanish commercial lending markets. In all those markets, some of CAM Group's competitors are subsidiaries and branches of foreign banks.” (par. 35-36 of the letter from the EC to Spain - Brussels, 24.7.2011 C(2011) 5461 final)
The Commission finds however that the emergency measures in favour of the CAM Group are temporarily compatible with the internal market for reasons of financial stability on the basis of 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:
|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: 24 Jul 2011
Duration: 60 months
GTA Evaluation: Red
the letter from the EC to Spain - Brussels, 24.7.2011 C(2011) 5461 final. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >