In March 2010, the government of Ireland announced a change in private-sector financial support.



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the official letter from the EC to Ireland - Brussels, 2.6.2010 C(2010) 3541 final. Available from : < >
the official letter from the EC to Ireland - Brussels, 11.10.2010 C(2010) 7037 final. Available from . < >
the letter from the EC to Ireland -Brussels, 15.7.2011 C(2011) 5177 final. Available from : < >

Inception date: 30 Apr 2010 | Removal date: open ended

Capital injection and equity stakes (including bailouts)

On 4 March 2010 the Irish authorities informed the Commission of their intention to undertake rescue measures in favor of Educational Building Society (EBS).
EBS is Ireland's largest building society and the eighth largest institution operating in Ireland. Building societies are mutual organizations which have no shareholders but instead are owned by their members, who are also their clients. Their objective is to collect deposits and provide loans. Profits are used to adapt interest rates to the advantage of the members, or are accumulated as reserves.
EBS will receive a total capital injection of up to EUR 875 million (an amount which could be reduced after assets are transferred to NAMA), split between two measures. The first measure will allow Ireland to gain control of EBS, while the payment of capital under the second measure will be staggered over 10 years and the exact amount will be subject to adjustments.
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 finds that measure 1 and 2 are also likely to affect trade between Member States as EBS is competing on the Irish retail savings markets, the Irish mortgage lending markets and the Irish commercial lending markets." (par. 41 and 46 of the official letter from the EC to Ireland - Brussels, 2.6.2010 C(2010) 3541 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.
Restructuring of Educational Building Society - State aid C25/2010 (ex- N212/2010)
On 31 May 2010 the Irish authorities submitted a restructuring plan for EBS.
According to the EBS restructuring plan, EBS will focus on its core business of retail lending and savings, while winding-down its non-core activities, essentially its commercial loan business. To that end, the following measures will apply to EBS:
(i) Exit its property development finance and wind-down of commercial business;
(ii) Increase its income through higher margins and lower costs;
(iii)Increase its core capital;
(iv)Improve its funding position;
(v) Introduce changes to its risk management and corporate governance;
(vi)Be sold to a third party.
The estimated cost of the restructuring plan has not been disclosed.
The Commission had doubts on the viability of EBS, and also doubted whether the aid is limited to the minimum and whether the measures limiting the distortion of competition were sufficient. The Commission therefore doubted at this stage that the restructuring plan fulfilled all the conditions laid down in the Restructuring Communication.
Thus, the EC took the decision to initiate the formal investigation procedure.
Emergency recapitalisation in favour of the merged entityEducational Building Society / Allied Irish Banks plc - State aidSA.33296 (2011/N)
The Irish Finance Minister announced on 31 March 2011 that the Irishbanking system was to be reorganised around 2 pillar banks, Bank ofIreland and Allied Irish Bank plc. He also announced that in thatcontext EBS would be merged into AIB to constitute this second pillarinstitution.

On 5 July 2011, Ireland notified to the Commission a combined rescue package for the merged AIB/EBS ("AIB/EBS") entity of up to EUR 13.1 billion.
The Commission came to the conclusion thatrecapitalisation Measuresincluding a (i) a placing of EUR 5 billion in ordinary shares, (ii) aCapital Contribution of up to EUR 6.5 billion and (iii) a contingentcapital contribution of EUR 1.6 billion by the State constitutes Stateaid pursuant to Article 107(1) TFEU and gave the following assessement:
"The measure is also able to affect trade between Member States asAIB/EBS is competing on, amongst others, the Irish retail savingsmarkets, the Irish mortgage lending markets and the Irish and UKcommercial lending markets. In the Irish market, some of AIB/EBS'scompetitors are subsidiaries of foreign banks, while in the UK marketAIB/EBS competes with both UK-based banks and the subsidiaries offoreign banks active on the UK market." (par. 59 of the letter from theEC to Ireland -Brussels, 15.7.2011 C(2011) 5177 final.)
THe EC concluded that the rescue aid in favour of the merged AlliedIrish Bank/Education Building Society entity fulfils the requirements ofArticle 107(3)(b) TFEU and is found to be temporarily compatible withthe internal market for reasons of financial stability. The rescue aidin favour of the merged Allied Irish Bank/Education Building Society isaccordingly approved for six months.
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.