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IP/09/741
Brussels, 12 May 2009
State aid: Commission approves aid package for
German bank WestLB
The European Commission has approved, under EC Treaty state aid rules,
the €5 billion risk shield for German bank WestLB and accompanying
measures, following an in-depth investigation opened in October 2008 (see
IP/08/1435). The risk shield was authorised by the Commission as temporary
rescue aid on 30 April 2008 (see IP/08/665). Germany asked for a
prolongation of the measure, together with accompanying measures. In light
of the far-reaching measures to be implemented to restore WestLB's longterm viability without undue distortions of competition, the Commission
concluded that the aid was compatible with the Single Market. In particular,
WestLB will refocus on less risky activities and reduce its size by half.
Competition Commissioner Neelie Kroes said: “After a constructive dialogue with the
German authorities, I am confident that the comprehensive plan they have submitted
will ensure that the viable parts of the bank will be preserved in the best interests of
West LB's owners, personnel, and ultimately tax payers. This decision opens up
possibilities for a wider restructuring of the German Landesbanks
WestLB AG, based in North Rhine-Westphalia (NRW), had total assets of €286.6
billion as at 31 December 2007. In its capacity as a German Landesbank, WestLB
acts as central bank and link to global financial markets for savings banks in NRW
and Brandenburg, as well as being a commercial bank operating on an international
scale.
On 30 April 2008, the Commission authorised a risk shield by the State of North
Rhine-Westphalia to protect the bank against the volatility of its €23 billion structured
investment portfolio (see IP/08/665).
On 8 August 2008, Germany notified a restructuring plan for WestLB and requested
the prolongation of the risk shield. On 1 October 2008, the Commission opened a
formal investigation procedure, to analyse whether the measures would enable
WestLB to return to long-term viability without undue distortions of competition (see
IP/08/1435).The latest amendments to the viability plan submitted by Germany show
a considerable reorientation of WestLB's business into less risky activities. Under the
plan, WestLB will in particular entirely stop certain risky business activities, e.g.
proprietary trading, thereby reducing its assets by 50%. In future, the bank may
maintain its activities in three core business areas:
1) so-called 'transaction banking' (i.e. the treatment of payments)
2) loans to medium-sized companies and its savings banks partnership ('Verbund
Mittelstand') and
3) corporate banking (e.g. loans to large companies), capital market activities
(including financial instruments trading) and structured finance (e.g. financing of
large projects).
Finally, Germany committed to change the bank's ownership structure through a
public tender procedure before the end of 2011.
The Commission is also satisfied that the state support is limited to the minimum
necessary and that measures such as the substantial reduction of locations at which
WestLB will be present and the sale of a majority of its shareholdings will minimise
the potential distortions of competition.
The Commission's decision is conditional upon the approval of the restructuring plan
by the statutory bodies of all of WestLB's owners.
The non-confidential version of the decisions will be made available under the case
number C43/2008 in the State Aid Register on the DG Competition website once any
confidentiality issues have been resolved. New publications of state aid decisions on
the internet and in the Official Journal are listed in the State Aid Weekly e-News.
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