ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
On 27 October 2008 the Belgian authorities contacted the Commission regarding their intention to make a capital injection of EUR 3 500 000 000 through special securities issued by KBC Group NV and fully subscribed by the Belgian State - State aid N 602/2008.
The KBC Group NV (hereafter "KBC") is the holding company of the KBC Bank, KBC Insurance and KBL European Private Bankers (i.e. KBL EPB). KBC is an integrated bankinsurance group, catering mainly for retail customers, small and medium-sized enterprises (SMEs) and private banking clientele. KBC is one of the three main financial institutions in Belgium.
Besides its activities in Belgium, central and eastern Europe, KBC is present in Russia, Romania, Serbia, several Western European countries and to a lesser extent in the US and Southeast Asia.
According to the Belgian state KBC is faced with financial distress as the consequence of the global financial crisis.
The Measure takes the form of an injection of in total EUR 3 500 000 000. The Commission considered that the measure described above constitutes State aid to KBC pursuant to Article 87 (1) EC Treaty and gave the following assessment:
" Given that KBC is active in the financial sector, which is open to intense international competition, any advantage from State resources to KBC would have the potential to affect intra-Community trade and to distort competition." (par. 41 of the letter from the EC to Belgium - Brussels, 18.12.2008 C(2008) 8820 final)
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 (Temporary Framework) and concluded 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. (par. 54-74 of the letter).
Update: N360/2009 - Restructuring plan
On 30 June 2009, the Commission approves another capital injection of EUR 7 billion by the Belgian state as part of the restructuring plan. (both recapitalisations combined)
Furthermore, Belgium guarantees for the super-senior tranche of 15 specific CDOs in the portfolio of KBC, the value of them is EUR 20 billion and the guarantees amount for EUR 14.4 billion of super-senior risk.
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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