IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 23 Dec 2009 | Removal date: open ended
Still in force

Loan guarantee

The Commission found compatible with the internal market a SoFFin guarantee of EUR 8 billion which Germany granted on 23 December 2009 to Hypo Real Estate (HRE), as well as a SoFFin guarantee of EUR 10 billion to be granted by Germany to HRE before 21 June
2010
 
HRE currently consists of the following main companies: Hypo Real Estate Holding AG, Deutsche Pfandbriefbank AG and DEPFA Bank plc.
 
The SoFFin guarantee of EUR 8 billion will start on 23 December 2009 and expire on 22 December 2010. According to the German authorities, a default of HRE cannot be excluded, if the liquidity need of EUR 8 billion cannot be covered on 23 December 2009. According to the German authorities, realistic alternatives regarding a refinancing for EUR 8 billion without a SoFFin guarantee are unlikely.
 
The SoFFin guarantee of EUR 10 billion will be granted by 21 June 2010 at latest, and will have a duration of one year. The German authorities committed that this measure will only be granted if it serves financial market stability and if it is indispensable for the liquidity needs of HRE.
 
The German authorities claim that the guarantees are State aid "to remedy a serious disturbance in the economy of a Member State" within the meaning of Article 107(3)(b) TFEU and on this basis compatible with the internal market.
 
The Commission concluded that the measure contains state aid and gave the following assessment:
 
"In line with the conclusion with regard to the guarantees covered in the opening decision and the preliminary conclusion in the extension decision, the Commission considers the EUR 8 billion and the 10 billion SoFFin guarantees in favour of HRE are State aid, as HRE would not have received them in the private market under the current circumstances. It is also evident that those guarantees are from State resources, they are offered to one bank only and that, because HRE is active in the banking sector which is characterised by competition across the Member States, these measures distort competition and affect inter-State trade. The German authorities do not dispute the aid character of these guarantees." (par. 19 of the letter from the European Commission to Germany - Brussels, 21.12.2009 C(2009)10636 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. 21 - 29of the letter ).
 
Further recapitalisation of Hypo Real Estate - State aid N 161/2010
On 30 April 2010 Germany sent the Commission a notification concerning a SoFFin1 capital injection of EUR 1.85 billion for Hypo Real Estate (HRE). On 3 May 2010 Germany clarified that this capital injection is divided into two tranches: an immediate capital injection of EUR 1.4 billion and a potential further capital injection of up to EUR 450 million.
 
Germany claims that HRE has a capital need of up to EUR 1.85 billion until the end of
September 2010. According to Germany, the measure is justified since the bank needs to sustain adverse impacts such as the volatility of certain subportfolios,foreign exchange rate risk and unforeseen further negative rating migrations.
 
The Commission came to the conclusion that:
"'...' the recapitalisation is appropriate, necessary and proportional, and can be considered compatible with the internal market on the basis of Article 107(3)(b) TFEU on a temporary
basis." (par. 37 of the letter from the European Commission to Germany - Brussels, 19.5.2010
C(2010) 3221 final.)

 
Commission decision of18 July 2011 on Restructuring aid measures for Hypo Real Estate - SA.28264
On 18 July 2011, the European Commission took a final decision on the various aid measures (see above) taken by Germany in favour of Hypo Real Estate :
 
"The state aid which Germany implemented and is planning to implement in favour of Hypo Real Estate Group, consisting of:
- capital injection of EUR 60 million, notified on 17 April 2009,
- capital injection of EUR 2.96 billion, notified on 3 June 2009,
- capital injection of EUR 3 billion, notified on 26 October 2009,
- capital injection of EUR 1.85 billion, notified on 30 April 2010, of which 32 EUR 450 million is contingent on the existence of certain circumstances,
- capital injection of EUR 2.08 billion, notified on 10 September 2010,
- guarantees of EUR 35 billion, notified on 30 September 2008,
- guarantees of EUR 52 billion, notified on 17 April 2009,
- guarantee of EUR 8 billion, notified on 26 October 2009,
- guarantee of EUR 10 billion, notified on 26 October 2009,
- liquidity guarantee of EUR 20 billion, notified on 2 September 2010,
- settlement guarantee of EUR 20 billion, notified on 10 September 2010 and
- assets transfer to the winding-up institution FMS Wertmanagement AöR, notified on 10 September 2010,
is compatible with the internal market on the basis of Article 107(3)(b) of the Treaty on the Functioning of the European Union in the light of the commitments set out in the Annex to this decision." (par. 135 of the letter from the European Commission to Germany -Brussels, 18.7.2011 C(2011) 5157 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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