Global Trade Alert

On 15 January 2008, Germany notified the Commission of measures in favour of Platin 317 GmbH (Sicherungseinrichtungsgesellschaft deutscher Banken (SdB) (deposit insurer in the private banking sector)).
 
The PdB is a registered association of private banks whose function is to safeguard the interests of its members, and is particularly active as the auditing body for the Bundesverband deutscher Banken e.V.'s Deposit Protection Fund ("Deposit Protection Fund").
 
The EUR 6.7 billion guarantee plus interest and costs will be fully exhausted by the guarantee put up by SoFFin (Special Fund Financial Market Stabilization) for the bonds to be issued by the SdB. The SoFFin-guaranteed bonds will be underwritten by the member banks of the Deposit Protection Fund. Once SdB has received the share subscription payments, it will transfer the entire proceeds of EUR 6.7 billion to the Deposit Protection Fund under a loan agreement. The term of this credit is identical to that of the bonds. The Deposit Protection Fund will use the loan proceeds to compensate the depositors of Lehman Brothers Deutschland.
 
The Commission found that the measure notified constitutes state aid to the SdB within the meaning of Article 87(1) of the EC Treaty and gave the following assessment:
 
"The SoFFin Guarantee comprises state funds which are used to benefit the SdB and therefore all the member banks of the BdB, and which consequently distort or threaten to distort competition and affect trade between Member States in which the BdB members, as internationally active banks, participate." (par 28 of the letter from the EC to Germany - Brussels, 21.1.2009 C(2009) 440 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. 32-47 of the letter).
 
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.