ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
This notified measure is an amendment of existing state aid to the West LB, namely C43/2008, from May 12 2008, a restructuring plan that provides guarantees up to EUR 5 billion
On 23 September 2009, an additional EUR 6.4 billion was granted as a temporary guarantee in the form of a risk umbrella to support a certain tranche of structured products called the "phoenix portfolio". On 7 October 2009, the EC accepted this measure (N531/2009) as conform with the common market (article 107(1)).
Under the file number C40/2009 and N249/2010, the EC allowed for the transfer of assets from the West LB into the newly created "Erste Abwicklungsanstalt" (EAA), an institution that is intended to absorb certain high-risk products from the West-LB and can be considered as a Bad Bank.
The notified measures falls under the umbrella of the restructuring plan from June 2011, called "Umstrukturierungsplan vom Juni 2011". This plan foresees to incorporate all services that are similarly provided by the regional savings banks ('Sparkassen') into the association of savings banks "Sparkassenverband". Furthermore it was agreed to sell parts of the West-LB services that fall not in this category and to transfer further risks to the EAA. The West-LB will continue to provide services under the new label of "SPM Bank".
The EC argues that the services provided by the West LB are still provided outside of Germany, hence affect the competition in the European common market. This leads to the conclusion that the 'notified measures will distort competition and therefore distort trade between the Member states of the EU'. (par. 118, letter from the EC to Germany, Brussels 20.12.2011, K(2011)9395 fin)
Germany argues that the measures do not constitute state aid according to article 107(1), because the association of savings banks will have to bear part of the financial burden, namely EUR 4.5 billion. (para. 114). Furthermore, Germany states that no loses in the portfolio transferred to the EAA occurred, so its not accurate to characterize this measure as a potentially distorting "relief" (par. 105, letter from the EC to Germany, Brussels 20.12.2011, K(2011)9395 fin)
The EC regards the measures as state aid according to article 107(1). Hence does not follow the German reasoning, but acknowledges the applicability of article 107 (3) (b) "serious disturbances in the economy of a member state" as an exception to article 107 (1). (par. 141, letter from the EC to Germany, Brussels 20.12.2011, K(2011)9395 fin).
The EC concludes that the "proper liquidation of West-LB" and the fulfilment of certain criteria allay the EC objections on the compatibility with the article 107 (1).
(par. 194, letter from the EC to Germany, Brussels 20.12.2011, K(2011)9395 fin).
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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