ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
On 6 July 2011, the Irish authorities notified a recapitalization measure of up to EUR 3.8 billion for IL&P.
IL&P Group is the parent company of Ireland's third-largest remaining bank, Permanent Trustee Savings Bank (PTSB) and its leading life assurance and investment management companies, under the brand Irish Life. IL&P also owns a 30% stake in a general insurance business called Allianz Irish Life Holding. Apart from Ireland, IL&P Group is also present in the UK but ceased new activities there in 2008.
Because of the financial crisis, the subsequent material deterioration in the financial position of IL&P led it to participate in the liquidity support measures put in place by the Irish State in order to safeguard the stability of the financial system in the State. In spite of all those measures, the Group's operations are still particularly weakened by the current state of the Irish economy and the difficulties of Ireland as a sovereign issuer in particular with regards to access to funding.
Notwithstanding IL&P's efforts to raise capital, the amount of capital required by the prudential capital assessment (PCAR) and the prudential liquidity assessment (PLAR). is way beyond the financial capacity of the Group. According to the Irish authorities, that shortfall must be met by the Irish State.
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 measure is also able to affect trade between Member States and to distort competition as IL&P is competing on, amongst others, the Irish retail savings markets, the Irish mortgage lending markets and the Irish commercial lending markets. In the Irish market, some of IL&P's competitors are subsidiaries of foreign banks.' (par. 67 of the letter form the EC to Ireland - Brussels, 20.7.2011 C(2011) 5258 final)
Regarding the compatibility of the Scheme with the internal market, the EC took the following decision:
'The recapitalisation measures comprising a (i) a Placing of EUR 2.3 billion in ordinary shares, (ii) a Contingent Capital Contribution of EUR 400 million and (iii) Standby State Investment of EUR 1.1 billion, constitute State aid pursuant to Article 107(1) TFEU.
The rescue aid in favour of IL&P fulfils the requirements of Article 107(3)(b) TFEU and is found to be temporarily compatible with the internal market for reasons of financial stability. The rescue aid in favour of IL&P is accordingly approved for six months or, if Ireland submits a restructuring plan by 31 July 2011, until the Commission has adopted a final decision on that restructuring plan.' (par. 96-97 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.
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