ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
INBS is a building society with a balance sheet total of EUR 14.1 billion. INBS offers traditional retail banking products to its members (savings and mortgages) in line with its goal as a building society. INBS is mainly active in Ireland, where it has a branch network of 50 branch offices and 40 branch agents and the UK where it has no branch offices. It has a staff of approximately 343 (as at 31 December 2008).
INBS will receive a total capital injection of EUR 2.7 billion (which will decrease after assets are transferred to the National Asset Management Act 2009 (NAMA)), split between two measures. (1) INBS will receive a EUR 100 million capital injection (hereinafter "measure 1") through the issuance of Special Investment Shares (hereinafter "SIS"). (2) INBS will receive a further capital injection of EUR 2.6 billion through a direct grant in the form of a promissory.
The Commission concluded that the measure contains state aid and gave the following assessment:
"The Commission observes that in this case State resources are involved as measures 1 and 2 are entirely financed by the State. The Commission also has to assess whether the measures confer a selective advantage on the beneficiary or beneficiaries of the aid. The Commission considers measure 1 and 2 to be selective as they solely benefit INBS. .. The Commission finds that measure 1 and 2 are also able to affect trade between Member States as INBS is competing on, amongst others, the Irish and UK retail savings markets, the Irish and UK mortgage lending markets and the Irish and UK commercial lending markets. In the Irish market, some of INBS' competitors are subsidiaries of foreign banks, while in the UK market INBS competes with both UK-based banks and the subsidiaries of foreign banks active on the UK market." (par. 41-47 of the letter from the EC to Ireland - Brussels, 30.3.2010 C(2010)2111 final).
Second emergency recapitalisation in favour of Irish Nationwide Building Society - State aid NN 50/2010 (ex N 441/2010)
On 12 October 2010, the Irish authorities notified to the Commission a second emergency recapitalisation in favour of INBS, for an additional recapitalisation of EUR 2.7 billion. According to the Irish authorities, the aid is justified by a dramatical deterioration of market conditions.
The Commission concluded that the EUR 2.7 billion capital injection in the form of an increase of the promissory note constitutes State aid pursuant to Article 107(1) TFEU.
The Commission also observed that Ireland put the aid in question into effect, in breach of Article 108(3) TFEU. Nevertheless, it found that the rescue measure in favour of INBS is temporarily compatible with the internal market for reasons of financial stability. The rescue measure in favour of INBS has accordingly been approved for six months or, if the Irish authorities submit a restructuring plan within the period prescribed in the next point, until the Commission has adopted a final decision on the restructuring plan of the bank.
Joint restructuring plan for Anglo Irish Bank and Irish Nationwide Building Society- State aid SA.32504
On 31 January 2011, Ireland notified the Commission of a joint restructuring and work-out plan
for Anglo Irish Bank and INBS.
The joint restructuring plan foresees the merger of Anglo and INBS, after the sales of their respective deposit books, into one single entity which will be licensed, fully regulated and 100% State owned. The joint opening balance sheet after the merger will amount to EUR '60-70' billion.
The objective of the proposed joint restructuring plan is to avoid the risk of further losses from new lending, manage the work-out of the loan books efficiently and keep State aid requirements to a minimum.
In the base case, the joint restructuring plan assumes that no additional capital beyond
that effectively injected to date, namely EUR 34.7billion (EUR 29.3billion for Anglo and EUR 5.4billion for INBS) will be required. In a stress scenario, capital requirements would increase up to EUR 38 billion, meaning that an additional EUR 3.3billion of capital '...' over the period of the plan (namely ten years).
The EC concluded that measures taken related to the restructuring plan are able to distort competition and affect trade between Member States. (par. 100-102 of the letter from the EC to Ireland - Brussels, 29.06.2011 C(2011)4432 final.)
The EC also concluded that the related measures are considered to be restructuring aid that those measure are compatible with the internal market under Article 107(3)(b) TFEU. (par. 191 of the letter)
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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