ANNOUNCED AS TEMPORARYNo
Bailout (capital injection or equity participation)
Sweden informed the Commission of the rescue aid to Carnegie Bank. The listed holding company D. Carnegie & Co AB (hereinafter 'the holding company') has two wholly-owned subsidiaries, Max Matthiessen Holding AB and Carnegie Investment Bank AB. The holding company has no business operations outside these subsidiaries. Max Matthiessen Holding AB (hereinafter "Max Matthiessen") acts as an intermediary for insurance and savings, administering about SEK 90 billion. Carnegie Investment Bank AB conducts operations in securities trading, investment banking, asset management and private banking.
As a result of the recent turmoil on the financial markets and the drying-up of interbank lending, Carnegie Bank experienced increasing difficulties to fund its operations. As Carnegie Bank's financing situation became so strained that it risked being unable to meet its payment obligations, the bank applied for and was granted special liquidity assistance by Sweden's central bank (Riksbank).
On 27 October 2008 the Riksbank accepted to give Carnegie Bank the requested liquidity assistance with an indicative ceiling of SEK 1 billion, raised to SEK 5 billion on 28 October. The total liquidity assistance granted by Riskbank was thus SEK 2.4 billion. The interest rate was the Riksbank repo rate increased by 150 basis points. Under the terms of the credit facility, the Riksbank had the right to call the loan at any time without stating reasons.
The Commission found that the Riksbank's special liquidity assistance to Carnegie Bank constitutes state aid within the meaning of Article 87(1) of the Treaty. "The Commission finds that the liquidity assistance granted an advantage to Carnegie Bank. This advantage was selective as it was granted exclusively to Carnegie Bank. In addition, the intense intra-Community exchanges in banking and financial services (illustrated by the Bank's strong presence on the four Nordic markets) entails that this advantage is liable to distort competition and to affect trade between the Member States." (par. 27 of the letter of the EC to Sweden Brussels, 15.12.2008 C(2008) 8660).
Article 87(3)(b) of the EC Treaty enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 87(3)(b) by the Court of First Instance.
The Commission referred to its Communication on the financial crisis and concludes that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 87(1) EC, it is compatible with the Common Market according to the Article 87(3)(b) EC Treaty. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (pa 47.48of the letter of the EC to Sweden Brussels, 15.12.2008 C(2008) 8660).
Update: Clearance of restructuring aidN18/2010
The EC reconfirms the existence of state aid but underlines the mitigation of trade distortions, by stating that: " Sweden had swiftly initiated restructuringmeasures to address the causes of the bank's difficulties and to ensureits viability.... Moreover,the risk of moral hazard has been addressed through an adequatecontribution of the former owners of the bank to the cost ofrestructuring" (press release 12 May 2010)
Therefore, the measure is considered to expire during the restructuring process, more precisely on 20 April 2012.
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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