ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
Following a package of measures in favour of Bradford and Bingley plc (hereinafter "B&B"), the UK authorities notified on 27 March 2009a liquidation plan for B&B.
B&B was a medium-sized UK bank, which provided specialist mortgages and savings products. Events in September 2008 in the context of the ongoing financial turmoil had a serious impact on B&B's liquidity position. The UK authorities decided to pursue a wind-down scenario in which the retail deposit book was to be sold while an orderly wind-down of the remainder of the business was to be carried out so as to maximise recoveries and minimise the burden on taxpayers.
The measures are the following:
a) The UK has provided a working capital facility to Rumpco wich may reach Ł11.7 billion.
b) The UK indicates the possibility of capital injection in the event that Rumpco breaches its regulatory requirements. The Rumpco's recapitalisation is foreseen only in adverse circumstances and it is currently estimated at '...' (undisclosed amount)
c) The existing guarantees covering certain wholesale borrowings covering app. Ł 7.5
billion as of October 2009 are expected to be in place until the wind-down is complete;
d) '...' (undisclosed measure)
e) Additional guarantees or other arrangements to ensure that the assets of the B&B pension scheme are sufficient to meet its liabilities.
The commission found that the measure constitutes State aid within the meaning of Article 107 (1) TFEU and gave the following assessment:
'Despite the ultimate aim of liquidation, Rumpco still conducts economic activities even though they are limited both in scope and in time. It manages its debt portfolio through activities that include, among others, granting further advances to existing customers as well as conducts some limited insurance activities. Given that these activities are still facing international competition the Commission considers that these measures have the potential to distort competition and thus affect trade between the Member States.' (par. 43 of the letter from the EC to the UK - Brussels, 25.1.2010 C(2010)350 final)
The Commission has decided not to raise any objections to the aid measures in the form of the working capital facility, the guarantees and the possible capital injection on the ground that they constitute State aid which is compatible with 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.
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