De Commissie keurt overheidssteun voor Duitse spaarbank Sparkasse KölnBonn goed (en)
The European Commission has approved under EU state aid rules a €650 million recapitalisation provided by Germany in the context of the restructuring of Sparkasse KölnBonn. According to the restructuring plan the bank will concentrate on providing traditional retail banking services to retail customers and small and medium-sized firms, withdraw from other activities and divest non-core subsidiaries. The Commission concluded that Sparkasse KölnBonn's restructuring plan is appropriate to restore the bank's viability, while addressing competition distortions brought about by the state support.
Commission Vice-President Joaquin Almunia, in charge of competition policy, said: "Sparkasse KölnBonn has worked out a profound restructuring plan, including changes to its corporate governance, which should ensure that the mistakes of the past are not repeated. At the same time, the plan safeguards lending to the real economy, in particular to SME's. Through a constructive dialogue with the German authorities we have managed to strike the right balance."
Sparkasse KölnBonn is the second largest savings bank in Germany with a balance sheet of €30 billion. It provides services to retail and corporate clients. In the region of Cologne-Bohn, where it is based, it is also active in project finance and capital markets, as well as in other financial activities such as asset management.
In the wake of the financial crisis, the capital of Sparkasse KölnBonn was strengthened by a total of €650 million, through the issue of certificates of participation and a so-called "silent participation", where investors receive remuneration but do not have voting rights. The coupon for the certificates of participation is 8 %. The remuneration for the silent participation is 12-month Euribor plus 7.25%.
In November 2009 the Commission opened an in-depth investigation, to examine the compatibility of the measures with EU state aid rules (see IP/09/1670). The Commission had doubts whether the remuneration on both instruments was still sufficient after the market for hybrid instruments had completely dried up as of the end of 2008. At the same time, it invited Sparkasse KölnBonn to submit a restructuring plan in order to assess the bank's long term viability without continued state support.
According to the restructuring plan, Sparkasse KölnBonn will focus on its statutory business model of a regional savings bank. The bank will concentrate on providing retail banking services to its traditional customer segments, i.e. private customers and SMEs, and withdraw from activities such as proprietary trading or investments in structured products and divest non-core subsidiaries. Furthermore, the bank will significantly reduce its administrative expenses.
The Commission's in-depth investigation found, in particular, that the restructuring plan ensures the long-term viability of Sparkasse KölnBonn, as the main causes of its difficulties - the subsidiaries related to the regional development and the exposure to the volatile investments - are addressed through the divestments of the respective investments and subsidiaries and a gradual withdrawal from those activities. The Commission further found that Sparkasse KölnBonn adequately contributed to the restructuring through asset sales and cost cutting measures. The loss absorption suffered by the private investors and the sale of profitable subsidiaries both contribute to an appropriate burden sharing. The divestments of non-core subsidiaries and the behavioural commitments provided by the German authorities sufficiently limit the distortions of competition brought about by the aid.
Overall, the restructuring measures will result in a balance sheet reduction of 17% (not including growth in the traditional local customer segments) by the end of 2014 as compared to the end of 2008.
The Commission is satisfied that the restructuring plan is in line with its Communication on restructuring in the financial sector during the crisis (see IP/09/1180) and as such is compatible with Article 107.3.b of the Treaty on the Functioning of the European Union (TFEU).
The non-confidential version of the decision will be made available under the case number C32/2009 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.