ANNOUNCEMENT 22 Dec 2008In December 2008, the government of Germany announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
Initial support scheme N655/2008
Prolongation scheme N412/2009
List of banks extracted from:
On 22 December 2008, the European Commission approved the recue aid for 'Norddeutsche Landesbank' (Nord/LB). This initial measure had a duration of six months.
On 10 July 2009, Germany notified the EC about a prolongation of the support scheme until 15 February 2010.
On 15 December 2009, the Nord/LB decided to phase out of the guaranteeprogram. (para. 11, letter from the EC to Germany, Brussels 25.7.2012)
The beneficiary is a major commercial bank with a balance of EUR 244.3 billion (para. 3, letter from the EC to Germany, Brussels 10.9.2009). Its activities are focused on the states of 'Lower Saxony, Saxony-Anhalt and Mecklenburg-Western Pomerania'. Nevertheless, Nord LB is present in the major trading centers like London, Singapore and New York (para. 5) The key areas of the bank are: 'investment, agricultural and real estate banking, corporate finance, ship and aircraft financing and private banking' (para. 4)
In late 2008, Nord/LB was confronted with difficulties of refinancing. The financial crisis led to distortions in the market of non-guaranteed securities. Mainly due to the state guarantees given to specific European banks. Therefore the states of Lower Saxony and Saxony-Anhalt helped the Nord LB, by giving a 'insolvency-proof guarantee' (para. 8) This guarantees amount to a maximum of EUR 10 billion per year and have duration of 6 month that can be extended up to 2 years (subject to the Prolongation).
Initially EUR 3.55 billion have been granted. The prolongation scheme will release an additional EUR 4 billion of guarantees and is therefore within the scope of the initial agreement. The maximum maturity of the guaranteed securities is 5 years.
To identify potential trade distortions, it is important to analyse the initial decision from 22 December 2008. In this document, the EC finds that: 'a selective advantage accrues to NORD/LB' and 'the guarantees comprise State resources which favour NORD/LB and which consequently distort or threaten to distort competition and affect the trade between Member States in which NORD/LB participates as an internationally operating bank.' (para. 31 & 32, letter from 22 December 2008)
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.