ANNOUNCED AS TEMPORARYNo
Bailout (capital injection or equity participation)
In April 2009, the Commission learned through the media and the website of BAWAG that the bank intended to apply for State support. On 18 November 2009 the Austrian authorities notified the State aid measures for BAWAG to the Commission and submitted a restructuring plan.
BAWAG was created on 1 October 2005 through the merger of two Austrian banks, BAWAG and P.S.K. The resulting bank is the fifth largest banking group in Austria. The bank concentrates its business on retail and commercial customers. With about 150 BAWAG branches and more than 1,300 post offices, the BAWAG group has the biggest centrally managed distribution network in Austria. In total, the group has around 6,300 employees.
BAWAG is present in Hungary, Slovenia, Malta and Libya through its subsidiaries and cooperation partners.
The notified measures consist of a EUR 550 million recapitalization and a EUR 400 million guarantee covering certain payment claims of BAWAG against subsidiaries. These measures are not covered by the approved Austrian rescue package for credit institutions.
Austria does not contest that the notified aid measures constitute State aid. The Austrian authorities request an approval of the measures under Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU) due to the financial crisis.
The Commission concluded that the measure contains aid in favor of the bank and gave the following assessment:
"Both the capital injection totalling EUR 550 million and the guarantee of up to EUR 400 million are granted by Austria, and thus from State resources within the meaning of Article 107(1) TFEU. Furthermore, the Commission notes BAWAG's interconnections as well as cross-border activities, so that any advantage from State resources would potentially affect competition in the banking sector and have an impact on intra-community trade." (par. 42-43 of the letter from the European Commission to Austria - Brussels, 22.12.2009 C(2009)10521 final)
Article 107(3)(b) TFEU 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 107 (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 107 (1) TFEU, it is compatible with the internal market according to the Article 107 (3)(b) TFEU. 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. 47-80 of the letter ).
Second restructuring aid for BAWAG:
On 22 March 2010 Austria provided a modified restructuring plan in accordance with point 82 of decision N 640/2009. On 21 June 2010, Austria notified an updated version of the modified restructuring plan for BAWAG.
According to the modified restructuring plan of 21 June 2010, BAWAG concentrates on Austrian retail and corporate customers. Its business strategy is to continue to take advantage of its retail distribution network in Austria to gather retail deposits in a costefficient way that can be deployed into attractive and customer-focused asset generation platforms allowing the bank to deliver growing and stable profits. The bank also intends to invest certain amounts in international corporate, Central and Eastern Europe and commercial real estate.
On the basis of the above, the Commission concludes that the modified restructuring plan of 21 June 2010 for BAWAG P.S.K. is capable of restoring the long-term viability of the bank, includes sufficient measures of burden-sharing and measures to limit distortions of competition. The Commission therefore considers that on the basis of this restructuring plan the capital injection is compatible with the internal market under Article 107(3)(b) TFEU.
Based on the above assessment and the commitments provided by the Republic of Austria the Commission raises no objection against the modified restructuring plan of 21 June 2010 for BAWAG P.S.K.
The aid is valid from from 23.12.2009.
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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