IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 30 Apr 2009 | Removal date: open ended
Still in force

Capital injection and equity stakes (including bailouts)

On 18 March 2009 Germany informed the Commission of its plan to implement a rescue measure for HSH Nordbank AG.
 
HSH, established on 2 June 2003 as the result of the merger between Hamburgische Landesbank and Landesbank Schleswig-Holstein is the fifth biggest German Landesbank. On 31 December 2008 the HSH balance sheet amounted to EUR 205 billion, risk-weightedassets("RWA") to EUR 112 billion and employees to ca. 4,900. The bank is represented at 20 foreign locations in Europe, Asia and America.
 
The notified measures consist of (i) a EUR 3 billion recapitalization as well as (ii) a EUR 10 billion risk shield covering about EUR '150-200' billion of assets provided by two major shareholders of HSH, Freie- und Hansestadt Hamburg and Land Schleswig-Holstein ('the Länder owners', with a combined share of 59.51%). After the implementation of the recapitalization and the risk shield the tier 1 ratio of HSH will increase to '9-10' % and is projected to remain above '7-8' % ratio during the period 2010 -2012. The equity ratio (Gesamtkennziffer) will increase to '14-15' % and is projected to remain above '10-11' % until 2012.
 
The Comission gave the following assessment:
 
"Both the recapitalization in the amount of EUR 3 billion and the risk shield in the amount of EUR 10 billion are granted by the Länder owners of HSH, thus from state resources. Therefore, the resources are State resources within the meaning of Article 87 (1) of the Treaty. Furthermore, the Commission notes HSH's cross border and international activities, so that any advantage from state resources would affect competition in the banking sector and have an impact on intra-community trade." (par. 24-25 of the letter from the EC to Germany - Brussels, 29.5.2009 C(2009) 4297 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. 32-49 of the letter).
 
Restructuring of HSH Nordbank - State aid C 29/2009 (ex N 503/2009)
Following the decisions in case N264 (see above), on 1 September 2009, Germany notified a restructuring plan to the Commission:
"The plan submitted by HSH Nordbank describes the measures the bank intends to apply '...' to restore its long-term viability until '2013-2015'. HSH's restructuring plan foresees an overall '45-65' % reduction of the balance sheet, which is to be primarily achieved through the transfer of about '40-60' % of its total assets (as of 2008) into an internal winding-down bank (Abbaubank) and a concentration on core activities and core regions." (par. 23-28 of the letter from the EC to Germany - Brussels, 22.10.2009 C(2009)8271 final.)

 
The Commission assesses that the measure constitutes State aid under Article 87(1) EC. Concerning the compatibility of the aid under Article 87(3) EC, the Commission came to the following conclusion:
"On the basis of the above the Commission comes to the preliminary conclusion that
the above measures of Germany benefitting HSH constitute State aid. The Commission
considers this aid as rescue aid, but has doubts that such aid can be found compatible with
the common market pursuant to Article 87(3) EC." (par. 82 of the letter)
 
Thus, the EC decided to initiate a formal investigation procedure which ended up on a condtional decision taken on 20 September 2011 that can be found in par. 277 of the letter from the EC to Germany - Brussels, 20.09.2011 K(2011) 6483 final 'in German'.
 
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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