ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
On 4 December 2008 the German authorities notified the Commission of measures to support BayernLB, Germany.
The beneficiary is BayernLB, a publicly owned credit institution operating in the form of a public institution. It is - indirectly through the holding company BayernLB Holding AG - owned by the Free State of Bavaria (50%) and the Association of Bavarian Savings Banks (50%). BayernLB Holding AG is the sole shareholder in BayernLB and is not itself a credit institution.
BayernLB is a commercial bank with an international presence. It has a home market in Bavaria with selective representation in other parts of Germany, neighboring European countries, Central and South-Eastern Europe, North America and Asia. BayernLB also has a presence in selected financial centers around the world. BayernLB's customers comprise sovereign States and municipal authorities, financial institutions, large and medium-sized companies and real-estate developers.
The intended stabilization of BayernLB consists of two measures: a reinforcement of capital in the amount of EUR10 billion, and a risk shield on the ABS portfolio of up to EUR 4.8 billion. Both measures are to be implemented by the Free State of Bavaria outside the framework of the aid scheme approved by the Commission on 12 December 2008 for a rescue package for financial institutions in Germany. However, as can be seen in the following explanations, the conditions follow the German aid scheme.
The Commission, however, found that the measure constitute aid within the meaning of Article 87(1) EC.
"As BayernLB operates in the financial sector, which is characterised by intense international competition, any advantage provided to BayernLB by State funds would carry the hidden potential to damage trade within the Community and distort competition. Moreover, State funds are at issue and the measures which will be implemented by the Free State of Bavaria are to be attributed to the State. The Commission is of the opinion that the measures grant BayernLB a selective advantage. The capital increase measures permit BayernLB to receive sufficient equity capital, which, in the light of the bank's difficult position and the current constraints upon financial markets, it would not have been able to receive to such an extent and under such terms. This creates an economic advantage for BayernLB and strengthens its position with respect to competitors in Germany and other Member States. This advantage is selective, as only one bank benefits." (par. 42-44 of the letter from the EC to Germany - Brussels, 18 December 2008 K(2008) 8839 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. 46-70 of the letter).
Restructuring aid for BayernLB, Germany - State aid C16/2009 (ex N254/2009)
On 29 April 2009, Germany notified a restructuring plan for BayernLB (including HGAA) to the Commission. According to Germany,the economic conditions of the countries where the bank is operating have deteriorated significantly. In particular, the economies of south-eastern Europe have tumbled from a prolonged period of strong economic growth into significant declines of real GDP. Thus, additional aid measures were necessary. In its decision C (2009)3811 final adopted on 12 May 2009 (case N 254/2009) the Commission raised doubts on the restructuring aid to BayernLB and whether the restructuring plan was apt to restore the viability of BayernLB.
In a new decision, the EC took the following decision (the case also concerns HGAA, a subsidiary from BayernLB based in Austria) :
"The Commission has decided to extend the proceedings (6 months) pursuant to Article 108(2) TFEU with a view to assess potential restructuring aid received by BayernLB through the additional aid provided to the HGAA group and with the view of assessing the viability and the measures proposed for limiting market distortions of BayernLB in light of the new situation." (par. 78 of the letter from the EC to Germany - Brussels, 23.12.2009C (2009) 10672 final)
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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