ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
On 30 April 2009, Germany notified to the Commission the intention to provide a recapitalization of the Landesbank Baden-Württemberg (LBBW) and an asset relief measure for two portfolios.
Landesbank Baden-Württemberg (LBBW) is an internationally operating commercial bank which focuses on Baden-Württemberg, Rhineland Palatinate and Saxony. It has more than 200 branches, which are mostly located in those regions, but also in other parts of Germany. In addition, the bank has 26 international business representations. The bank has about 12.250 employees. Its business model is mainly focussed on SMEs (Mittelstand). The bank is owned by the Land Baden-Württemberg with 35.611 % (Land-BW), the Savings banks association of Baden-Württemberg with 40.534 % (SVBW), the city of Stuttgart with 18.932 % (Stuttgart), and the Landeskreditbank Baden-Württemberg with 4.923 % (L-Bank). All shareholders are either public entities or owned by public entities.
The deepening financial crisis affected i.a. LBBW's securitisation portfolios. Overall, the bank made a loss of EUR 2.1 billion in 2008.
The foreseen aid measures for LBBW are composed of a capital injection and asset relief for two portfolios of structured assets.
The Commission found that the measures constitute aid within the meaning of Article 87(1) of the EC Treaty. The Comission gave the following assessment:
"Both the recapitalisation in the amount of EUR 5 billion and a guarantee in the amount of EUR 12.7 billion are granted by the shareholders. All shareholders are either public entities such as regions or municipalities or owned by them. As all shareholders of LBBW are either directly or indirectly attributable to the State, the Commission concludes that the resources for the capital injection and the guarantee are State resources within the meaning of Article 87 (1) of the Treaty.
The measures are favouring only LBBW. They are selective and potentially lead to a distortion of competition. Furthermore, they affect intra-Community trade because of LBBW's cross-border activities and due to the fact that the banking sector operates internationally. Thus, the Commission agrees with Germany that the measures in favour of LBBW constitute aid in the sense of Article 87(1) of the EC Treaty." (par. 40 and 43 of the letter from the EC to Germany - Brussels, 30.6.2009 C (2009) 5260 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. 46-90 of the letter).
Update:On 15 December 2009, the Commission approved a restructuring plan that will transform the corporate governance structure of the LBBW into a joint-stock company and forsees the sale of several business units/subsidiaries including LBBW CZ until 31 December 2013. If a sale is not feasable, the remaining subsidiaries are subject to winding-down.
On 29 August 2012, Germany informed the commission, that it it sold additional branches/subsidiaries, namely ' Universal' and 'National Suisse'.
On 11 June 2013, Germany requested an amendment to the decision, asking for no longer beeing required to convert LBBW into a joint-stock company.
Regarding pontential trade distortions, the EC finds that the sale of additional subsidiaries 'adresses any relevant competition distortions' (par. 36, letter from the EC to Germany, Brussels 9.12.2013).
The trade distortions are therefore considered to expire with the sale/wind-down of the business units on 31 December 2013.
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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