ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
In April 2009 Österreichische Volksbanken-AG (ÖVAG), the then fourth largest bank in Austria, was recapitalised with EUR 1 billion under the Austrian bank support scheme. Further, it placed three issues of State guaranteed debt instruments in the market, each of EUR 1 billion. In November 2010, Austria submitted ÖVAG's restructuring plan to the Commission. The restructuring plan aimed at a more focused bank and therefore involved a significant reduction of the bank's size through abandonment or downsizing of many non-core activities.
ÖVAG is the central institute of Austria's Volksbanks (local credit co-operatives) providing them with centralized back-office services, liquidity management and financial products. Volksbanks are universal banks with local to regional scope of activities. ÖVAG operates in five business segments: corporate banking, retail banking, real estate, financial markets and banking book/other operations. ÖVAG abandoned public finance and infrastructure financing in 2008 when it sold its stake in Kommunalkredit Austria AG ("KA") to the Republic of Austria for the nominal amount of EUR 1.
The EC gave the following assessment:
'As stated in Article 107(3)(b) 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. The Commission recalls that it has already established in the decisions on the Austrian bank support scheme that liquidity guarantees and capital injections given under the scheme constitute aid. That evaluation is not disputed by Austria.' (par. 47-48 of the letter from the EC to Austria - Brussels, 9.12.2011 C (2011) 9227 final)
The EC assessment related to the Austrian bank support scheme (State aid N 557/2008):
'The guarantees for new liabilities and the recapitalisation measures will enable beneficiaries to acquire the necessary capital and liquidity on more favourable terms than would have been possible under the conditions prevailing in the financial markets. Inasmuch as this will confer an economic advantage on beneficiaries and strengthen their position vis-ŕ-vis their competitors in Austria and in other Member States, the measures at issue will distort competition and affect trade between Member States. The resulting advantage will be a selective one in that it will benefit only beneficiaries under the scheme and will be financed through state resources.' (par. 53 from the letter from the EC to Austria - Brussels, 9 December 2008 C(2008) 8408 final)
The EC concluded that, on the basis of the restructuring plan submitted in November 2010, serious doubts remain whether ÖVAG will be able to restore its long-term viability, whether sufficient burden-sharing is achieved and whether adequate measures are taken to limit distortions of competition. On that basis, the Commission has doubts whether the restructuring aid can be considered compatible with the internal market pursuant to Article 107(3)(b) TFEU.
Update: Further aid measures for ÖVAG - SA.31883
On 19 September 2012, the Commission approved the aid measures mentioned above, as well as further instruments implemented by Austrian authorities due to the losses made by ÖVAG in 2011. The new measures involve a capital increase of EUR 250 million, as well as an asset guarantee of EUR 100 million which increased the bank's capital by the same amount.
2nd Update: Changes to the restructuring plan accepted by the Commission
After a stress test carried outin October 2014 within the ECB/Single Supervisory Mechanism showed a capital shortfall of 865 million EUR, the Austrian government submitted a changed restructuring plan to the Commission in June 2015. The plan included moving the core functions of the ÖVAG to the regional Volksband Wien-Baden and separating the non-core assets of ÖVAG to a different entity called "Immigon". Furthermore, the 51 local banks shall be merged into just 10 in order to improve their efficiency.
On 2 July 2015, the European Commission approved these amendments judging them as in line with the state aid rules.
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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