ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
On 22 May 2010 the Spanish authorities notified to the Commission their intention to provide a capital injection and liquidity support to CajaSur through the Fondo de Restructuración Ordenada Bancaria (FROB).
CajaSur is a Spanish saving bank ("caja de ahorros"). Cajas de ahorros are credit institutions that have no shareholders, but instead are governed by their members. CajaSur mainly operates in the Community of Andalucia, and particularly in the region of Córdoba, where it has a strong footprint.
The European Commission gave the following assessment:
"The Commission observes that in this case, the intervening authority (the FROB) is directly financed through State resources. The measures confer a selective advantage on the beneficiary of the aid, CajaSur. In particular, the measures provide capital and liquidity to CajaSur and allow the bank to restore its regulatory solvency ratio and to avoid technical insolvency...The Commission furthermore finds that the measures distort competition as they allow CajaSur to obtain the capital and liquidity necessary to avoid technical insolvency and exit from the market in the very short term. The Commission finds that the measures are also likely to affect trade between Member States as CajaSur is competing on the Spanish retail savings markets, the Spanish mortgage lending markets and the Spanish commercial lending markets. In all these markets, some of CajaSur's competitors are subsidiaries of foreign banks. CajaSur is also active on the European (and international) wholesale funding markets." (par. 30-35 of the letter from the EC to Spain - Brussels, 23.5.2010 C(2010) 3363 final corr)
The Commission concluded that those two measures (EUR 800 million capital injection and the EUR 1.5 billion credit facility) in favour of CajaSur constitute State aid pursuant to Article 107(1) TFEU.
Restructuring of CajaSur - State aid N 392/2010
Following the capital inhection of May 2010 (see above), Spain notified on 13 September 2010 the restructuring plan for CajaSur. The restructuring plan is estimated to be implemented until December 2015.
As from the date of CajaSur's intervention by the BOS, the FROB, assisted by Nomura International Plc. ("Nomura"), started drawing up the restructuring plan for CajaSur pursuant to which CajaSur should be able to overcome its financial difficulties by either merging with another financial institutions or by transferring all of its assets and liabilities to one or more credit institutions.
The restructuring plan put together by the FROB with the assistance of Nomura and approved by the BOS on 30 July 2010,will transfer CajaSur's assets and liabilities to Bilbao Bizkaia Kutxa (BBK) and includes the following of measures:
Maintain CajaSur's footprint in the territories where it currently operates (mainly in the Cordoba area). BBK will keep CajaSur's brand and develop a local council of advisors in Cordoba to foster its presence in the area.
n A foundation will be established by the Bank to fund social projects.
n Adjust CajaSur's credit portfolio to the size of its balance sheet and to reduce its exposure to real estate by enhancing internal controls and risk policies.
n Integrate BBK and CajaSur's branch networks where they overlap, but maintaining CajaSur's branches in its area of influence. Outside that area, consolidation will be done based on branch profitability. In particular '...' branches out of 474 branches will be closed and CajaSur's exposure to real estate sector will be reduced. (more details par. 31-47 of the letter from the EC to Spain - Brussels, 8.11.2010 C(2010) 7710 final)
In the context of the Restructuring Plan, the Business will receive as a restructuring measure State aid in the form of an APS for an amount of EUR392 million.
Concerning the restructuring plan, the EC gave the following assessment:
"The Commission identifies five parties that could potentially benefit from the aid:
1) the purchaser of the Business, BBK; 2) CajaSur; 3) retail depositors; 4) subordinated bond-holders; 5) the Business itself.
n With regard to the purchaser of the Business, BBK, an advantage could exist if the price paid was too low. On the basis of the information provided by Spain, the Commission considers that the Tender Procedure was an open and nondiscriminatory tender which resulted in the best bid winning the tender. '...'The Commission has, therefore, no reason to believe that the offer made and the price paid did not reflect the market price. Consequently, the Commission concludes that BBK will not receive aid.
n With regard to CajaSur, the Commission notes that the savings banks will be liquidated and will cease to carry out any economic activity. In particular, after the disposal the Business CajaSur will be liquidated and it will cease to exit a legal entity. Therefore, CajaSur was the beneficiary of rescue aid but not of restructuring aid.
n With regard to retail depositors, the Commission, in line with its previous Decisions '...' is of the view that there is no State aid to the retail depositors of CajaSur because they are individuals and not undertakings.
n As regards subordinated debt-holders, '...' the Commission observes that the subordinated creditors only receive payments after all other more senior creditors have been paid. The Commission therefore concludes that the subordinated creditor will not have a special position in this case and consequently no advantage has been conferred on them. Therefore no aid has provided to the holders of subordinated debt.
n As regards the Business, the Commission has to investigate whether it continues to undertake economic activities. If the Commission concludes that this is the case, it has to establish whether the economic activities transferred can be considered as a potential beneficiary of State aid. The Commission notes that the
Business comprises all of CajaSur's banking activities. After the Disposal, CajaSur's branches will continue to operate as normal, now as a subsidiary of the BBK group, while CajaSur will cease to exit as legal entity. The Bank will thus be allowed to continue providing the same products to its customers as CajaSur did before the Disposal. Therefore, the Business will undertake economic
activities, as it will provide a variety of financial services to its customers.
The Commission considers that the restructuring measures constitute State aid within the meaning of Article 107(1) TFEU are financed through State resources, are imputable to the State, are selective in nature since the Business is the beneficiary of the Restructuring aid and provide it with a clear advantage distorting
or threatening to distort competition and affecting trade between Member States." (par. 52-53 of the letter)
The Commission has however decided to consider the aid measures implemented by Spain in the context of the restructuring of CajaSur to be compatible with the internal market.
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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