ANNOUNCEMENT 06 Jul 2009In July 2009, the government of Germany announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
Initial scheme: N639/2008
Prolongation scheme N400/2009
List of affected banks extracted from:
On 6 July 2009, Germany notified the EC about its intention to provide liquidity guarantees up to EUR 7 billion to 'Deutsche Industriekreditbank AG' (IKB).
In the initial decision from 21 October 2008, the EC already approved a risk shield and capital injections in the amount of EUR 9 billion. (para. 2, letter from the EC to Germany, Brussels 17.08.2009) Additionally, EUR 5 billion was approved in the form of guarantees for liabilities.
The IKB is a 'medium-sized' private bank with headquarters in Düsseldorf. The bank is owned by the US investment fund 'Lone Star' that holds 91.5 per cent of the shares. The bank serves commercial clients in Germany and Europa, mainly SMEs, multinationals and project partners (para. 6). Due to the economic circumstances, the financial year 2008/2009 ended with a loss of EUR 580 million.
On 27 November 2008, Germany granted a liquidity guarantee of EUR 12 billion. (N639/2008). A first tranche of EUR 5 billion was used immediately while a second tranche of EUR 7 billion was released on 31 December 2009. EUR 4 billion of the second tranche with a maximum guarantee period of 36 months and EUR 3 billion with a maximum term of 60 month (expiry 31 December 2014).
To identify potential trade distortions, it is important to analyse the initial decision from 22 December 2008. In this initial decision, the EC concludes:'Given that IKB operates in the financial sector and is therefore subject to intense international competition, any advantage conferred on it from state resources is likely to affect intra-Community trade and distort competition. Since the aid was granted by SoFFin, state resources are involved and the measure must be attributed to the State' (para. 21, letter from the EC to Germany, Brussels 22.12.2008)
In the 2009 decision, the EC confirms its reasoning by stating that 'the notified guarantee for liabilities in favour of IKB constitutes State aid within the meaning of Article 87 (1) EC Treaty It should be noted in particular that no market investor would grant IKB the same amount of liquidity under the current circumstances.' (para. 23, letter from the EC to Germany, Brussels 17.08.2009)
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.