Staatliche Beihilfen und ihre Kontrolle (German Edition)

Accordingly, the beneficiary bank must disclose incurred and expected losses of the portfolio, and should limit the transfer price to the real economic value.

However, if the beneficiary bank capitalises the bad bank with sufficient equity and thereby enables the bad bank to absorb future losses, the same economic effect is obtained. Germany claims that the equity to be provided to the bad bank i. In the absence of a proper valuation it remains unclear whether this equity is sufficient to cover the write down or first loss required under the IAC as no details regarding the methodology used have been revealed. However, aggregate figures provided by Germany reveal a difference between the book value and the real economic value of EUR [2,,5] billion.

Thus, the equity provided appears to be insufficient to cover the difference between the book value and the real economic value, which is at odds with the requirements of the IAC. Furthermore, the shareholders have an obligation to bear losses resulting from the resolution of the bad bank.

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Germany claims that both obligations will theoretically not be needed and do not have an economic value. This is, in the view of the Commission, further evidence that the equity provided to the bad bank is not sufficient to cover all potential losses and, therefore, to cover the difference between the book value and the real economic value. The Commission consequently has doubts that the measures amount to proper burden sharing in line with the IAC and reserves a final judgement on compatibility until the real economic value has been properly established.

Point 21 of the IAC notes that correct remuneration is another element of the burden-sharing requirement. The Commission shall ensure, as noted in Annex IV to that Communication, that any pricing of the asset relief must include remuneration for the State that adequately takes account of the risks of future losses exceeding those projected in the determination of the real economic value. The notification does not indicate how WestLB will remunerate the asset relief measure.

Instead, Germany claims there is no need to provide remuneration, because the equity provided to the bad bank was sufficient to cover both losses and the capital relief effect. Apart from the fact that the Commission has doubts as to the establishment of the real economic value, it has not received any figures for the calculation of the capital relief effect. Since it is not in a position to verify whether the claim of Germany is correct, the Commission must reserve doubts in this respect.

Furthermore, the Commission highlights again the potential benefit stemming from the shareholders obligation to bear the losses of the bad bank and that apparently it was necessary to cap this obligation as regards the saving banks. This is further evidence that the equity may not be sufficient to cover both losses and the capital relief effect.

Nevertheless, no remuneration is envisaged. Therefore the Commission raises doubts regarding remuneration. The recapitalisation and the asset relief measures are provided with the aim of enabling the restructuring of WestLB. The updated restructuring plan reveals that the original timetable for the asset relief measure has been delayed. Moreover, the currently assessed measures show that a significant amount of additional aid is required compared to the aid under assessment in the Decision of 12 May Therefore, in the context of the assessment of the revised restructuring plan, all aid measures, including those which were already examined in the Decision of 12 May , will be considered when evaluating the restoration of viability of WestLB through the spin-off of assets into a bad bank and the sale of the remainder by the end of The Commission first doubts whether WestLB can generate sufficient revenues that would enable the bank to pay an appropriate remuneration for the recapitalisation and the asset relief measures.

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Hence, the Commission doubts that the restructuring plan is suitable to restore the viability of WestLB. Furthermore, the restructuring plan raises doubts that it is suitable to ensure that WestLB can be sold in a public tender in whole or in parts. As regards marketability, Germany anticipates that further capital will be required to enable the sale of the bank. The Commission takes this as an indication that Germany does not assume that the restructuring plan is apt to achieve the sale of the bank.

According to the business plan, even in a medium-term perspective two of the three core business areas currently break even only because a considerable amount of costs has been accounted for in the Corporate Centre unit and has not been fully allocated to the three core business areas. The Commission therefore has doubts that these core business areas are marketable. One of WestLB's core assumptions for the business plan — and a key factor for prospects of its profitability in the future — is that the bank will receive a Single-A rating again in the future.

Hence, the scepticism that is expressed in that report does not justify assuming that the bank's rating will improve in the short-term. Thus, the projected profit and loss figures are unlikely to be achieved as the current plan seems to significantly underestimate WestLB's cost of funding. Germany has provided a commitment to limit payments on capital instruments in case of losses and to achieve loss contribution. According to an ad hoc publication dated 16 December , WestLB will probably post a loss for and not release reserves to enable payment and coupons or prevent loss participation.

Shareholders and other creditors of capital instruments will hence contribute to the restructuring. However, the notified measures limit the potential for losses and thus enable WestLB to serve these instruments in the future. Thus, burden-sharing by shareholders and holders of capital instruments will remain limited. In particular, the savings banks, instead of participating adequately in the burden-sharing, benefit significantly from the asset relief measure.

As a result of the recapitalisation, they only contribute to the restructuring process of WestLB to a very limited extent. Furthermore, according to the FMStFG, the shareholders of the beneficiary bank should also compensate for losses that may occur at the resolution of the bad bank, corresponding to their stake. On this basis the Commission has doubts that burden-sharing is sufficient.

"staatlich" English translation

Moreover, should Germany not propose genuine measures for burden-sharing of the savings banks, the Commission would have to ask for recovery of any unlawful and incompatible aid from the savings banks. According to point 30 of the Restructuring Communication, the nature and form of measures limiting the distortion of competition depends on the amount of the aid and the conditions and circumstances under which it was granted, as well as on the characteristics of the market or markets on which the beneficiary bank will operate.

The Commission doubts that the measures proposed to mitigate the distortive effect of the entire aid original aid and present aid are sufficient as no relevant additional measures have been proposed notwithstanding the substantial additional aid to be received by WestLB. Given the potential magnitude of the aid stemming from the original measures plus asset relief measures and the capital injection, the Commission, at this stage, cannot exclude that […] WestLB might be the only alternative to make all the aid compliant with Article 3 b TFEU.

All measures in favour of WestLB constitute State aid, which can however not be authorised at this stage because the asset relief measure does not fulfil the conditions of transparency and disclosure, valuation, burden sharing, and remuneration and because of doubts regarding the chances of restoration of viability, burden sharing and the mitigation of distortion of competition. In the present case the supervisory authorities have confirmed that the aid is necessary in order to prevent of the initiation of bank resolution procedures of a systemically relevant bank.

It has first been established that the recapitalisation measures fulfil the requirements of the Recapitalisation Communication. Second, as regards the asset relief measures, the Commission has doubts regarding their compatibility with the IAC. These doubts relate in particular to the real economic value, which could not be assessed at this stage. However, these doubts do not hinder a temporary approval for reasons of financial stability, because Germany committed that the measure would be brought in line with the IAC if the real economic value turned out to be lower than submitted.

Given the imminent threat of the initiation of bank resolution procedures in the absence of the measures, the Commission considers the recapitalisation measure and the asset relief to be temporarily compatible for six months with the internal market as emergency support under Article 3 b TFEU. Therefore, the Commission has at this stage temporarily no objection to the transfer of the assets to the bad bank.

In light of the doubts regarding compatibility of the asset relief measure with the IAC and the failure of the current revised restructuring plan to demonstrate that it will ensure the sale of the beneficiary, proper burden sharing and mitigate the distortions of competition, the Commission needs to further investigate the measures and thus to open a formal investigation procedure pursuant to Article 2 TFEU.

The Commission concludes that the measures notified by Germany on 10 December concerning the recapitalisation of WestLB, the guarantee and the associated asset relief measure constitute State aid within the meaning of Article 1 TFEU. In the light of the foregoing considerations, the Commission has decided to initiate the procedure laid down in Article 2 TFEU regarding the asset relief in the form of the establishment of a bad bank concerning transparency and disclosure, valuation and burden sharing including remuneration as well as on the restructuring aid asset relief, recapitalisation and guarantee to WestLB.

Germany is required to provide in addition to all documents already received, information and data needed for the assessment of the compatibility of the aid, and in particular:. Germany is requested to forward a copy of this letter to the potential recipients of the aid immediately. The Commission warns Germany that it will inform interested parties by publishing this letter and a meaningful summary of it in the Official Journal of the European Union. All such interested parties will be invited to submit their comments within one month of the date of such publication.

The Commission notes, that for the reason of urgency Germany exceptionally accepts the adoption of the decision in the English language. The two sets of provisions are, in substance, identical. For the purposes of this Decision, references to Articles and of the TFEU should be understood as references to Articles 87 and 88, respectively, of the EC Treaty where appropriate.

Its main objective is to take over — and subsequently to wind-up — risky and non-strategic assets.

German-English translation for "staatlich"

Usage of a bad bank requires that the requesting bank has a viable business model and is sufficiently capitalized. Upon request, the SoFFin will allow or reject the application after an assessment of the business concept for the bad bank and an evaluation of the assets to be taken over. If a bad bank is created, the SoFFin is responsible for its monitoring, coordination and liquidation, while the bad bank is autonomously responsible to cover its operating costs. Losses or surpluses after the wind-up of the bad bank's asset are allocated to the shareholders of the beneficiary bank.

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We want to see an end to the advantages inherited by some of the old state monopolies. Persecution is not just political or caused by the States. So gibt es nicht nur Verfolgungen politischer Natur oder von staatlicher Seite. But what about government support for the big banks?

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True, government infrastructure spending is often wasted. Edom began her journalism career at the state-owned daily newspaper. Edom begann ihre journalistische Karriere bei einer staatlichen Tageszeitung. Let us take another sector: Nehmen wir einen anderen Bereich: This will considerably simplify state aid procedures.