ANNOUNCEMENT 23 Sep 2011In September 2011, the government of Spain announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
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On 23 September 2011, Spain notified to the European Commission a capital injection of EUR 2.46 billion through the Spanish government program FROB ('Fondo de Reestructuración Ordenada Bancaria').
The capital injection will be performed in the form of a purchase of ordinary shares issued by NCG Banco (par. 9, letter from the EC to Spain, Brussels 30.9.2011)
NCG Banco is a commercial bank incorporated on 14 September 2011 by Novacaixagalicia. Novacaixagalicia already received a first EUR 1.16 billion state aid on 29 June 2010. The new recapitalisation was triggered by new solvency framework. Under the new framework, the bank has to meet a solvency level of 10 per cent of its risk weighted assets. Under the new framework, NCG banco had a capital deficit of EUR 2.62 billion. (par. 17)
The EC finds: 'The measure confers a selective advantage on the beneficiaries of the aid, NCG Banco and Novacaixagalicia. In particular, the measure providing capital allows NCG Banco to restore its regulatory solvency ratio and avoid its technical insolvency.' (par. 30)
The EC therefore concludes that: 'the measure distorts competition as it allows NCG Banco and Novacaixagalicia - which runs its banking activity through NCG Banco - to obtain the capital necessary to avoid technical insolvency and its exit from the market.' (par. 32)The commission finally concludes: 'that the measure is likely to affect trade between Member States as NCG Banco and Novacaixagalicia compete on the Spanish retail savings markets, the Spanish mortgage lending markets and the Spanish commercial lending markets.' (par. 33)
Update: Restructuring plan - SA.33734
On 21 November 2011, Spain notified the restructuring plan for NCG. The stress test revealed that NCG needs additional capital of EUR 5.425 billion to meet the regulatory solvency levels (par. 29, letter from the EC to Spain, Brussels 28.11.2012) The FROB therefore subscribes for EUR 5.425 million in ordinary shares (issued by NCG).
Furthermore, NCG transfers impaired assets of EUR 5-10 billion to the bad bank AMC. (par. 46)
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