ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
Hypo Group Alpe Adria (HGAA) is an international finance group with a balance sheet total of EUR 43 billion and risk weighted assets of EUR 32.8 billion as of 31 December 2008. Currently, HGAA has 8100 employees. In banking, the bank offers loans, payment services, export credit documentation and deposits as well as the sale of investment products and asset management services. As regards leasing, the group concentrates on cars, real estate, planes and ships.
HGAA is active in a total of twelve countries (Austria, Italy, Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, Germany, Lichtenstein (activity in liquidation), Hungary, Bulgaria, the former Yugoslav Republic of Macedonia and Ukraine).
In the current crisis, the economic conditions of the countries where the bank is operating have deteriorated significantly. In particular, the economies of south-eastern Europe have tumbled from a prolonged period of strong economic growth into significant declines of real GDP.
These developments affected the credit worthiness of borrowers and the quality of the loan portfolio.
The expected losses would reduce the capital ratio of the bank to a Tier 1 capital ratio of below 4% by the end of 2009 which is less than the regulatory required minimum. Initially, the current owners were not ready to inject the necessary capital into the bank.
The Austrian financial market supervisory authority issued an ultimatum to the owners
to take the necessary decisions for a recapitalisation of HGAA by 11 December 2009; otherwise the bank would face supervisory action.
Between December 2008 and June 2013, Austria notified several measures. The set of measures includes the following elements: (non-exhaustive list, see source for the complete list)
1) December 2008: A capital injection of EUR 700 million by its majority owner Bayern LB and an additional EUR 900 million capital injection by the state of Austria. Furthermore Austria guarantees for an additional EUR 1.35billion.
2) December 2009: The ownership of HGAA changed as Austria acquired all shares by contract for the symbolic price of one euro from each of the owners. This measure will be based on the Austrian law for remedying a serious disturbance in Austria's economy Finanzmarktstabilitätsgesetz (FinStaG). As a result, the bank would be nationalised and 100% owned by Austria.
3) By 31 December 2009, Austria granted temporarily to HGAA asset guarantees of an amount of up to EUR 100 million on the conditions for distressed banks under the Austrian emergency bank support scheme. Furthermore, Austria injects an additional EUR 450 million under the same scheme.
4) The Land Carinthia will convert existing Tier 2 capital in the amount of EUR 50 million into non-convertible Partizipationskapital (Tier 1) without voting rights with a dividend of 6%, which will be due for the first time for the business year 2013. Under the same conditions, the Carinthia-controlled Landesholding will inject further EUR 150 million non-convertible Partizipationskapital (Tier 1) at the latest by 30 June 2010.
5) Austria provides an additional EUR 200 million of asset guarantees from 31.12.2010 until 30 June 2013.
6) In December 2012, Austria injects an additional EUR 500 million of Tier 1 Partizipationskapital and provides an additional EUR 1 billion guarantees for Tier 2 instruments.
The Commission concluded that the measure is State aid pursuant to Article 87 (1) of the EC Treaty to HGAA and gave the following assessment:
"According to Article 107(1) 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." (par. 46 of the letter from the EC to Austria - Brussels, 23.12.2009C (2009) 10672 final)
On 29 June 2013, Austria presented plans to wind down HGAA, this plan includes:
- reduction of the balance sheet from EUR 43.3 billion to EUR 6.56 billion in 2017
- winding down of all core activities (not subject to sale)
- sale of the Austrian branche of HGAA , called HBA by 30 June 2014
- sale of the SEE network (Balkan region subsidiaries) by 30 June 2015
The EC concludes: 'As such, the sales/wind-down process of HGAA contributes significantly to limiting the competition distortions of competition resulting from the aid, because HGAA as such will disappear from the markets.(letter from the EC to Austria, Brussels 3.9.2013)
The measure is therefore considered to expire on 30 June 2015(by latest)
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.
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