Commission opens in-depth investigation into support measures for German savings bank Sparkasse KölnBonn
05 November 2009
The Commission wants a restructuring plan for German savings bank Sparkasse KölnBonn. At the end of 2008 its capital was strengthened by €650 million through the issuing of participation certificates. Germany did not notify the measures until later.
Competition Commissioner Neelie Kroes said: “Should the Commission find that the measures constitute state aid, we will have to ensure that they are accompanied by a realistic restructuring plan to address the problems that led to the current situation, without giving the bank an unfair advantage over its competitors."
Sparkasse KölnBonn is a German savings bank. Its träger (responsible public institution) 'Zweckverband Sparkasse KölnBonn' is a public body 70 per cent owned by the city of Cologne and 30 per cent by the city of Bonn. At the end of 2008/beginning of 2009 its capital was strengthened by a total of €650 million through the issuing of certificates of participation and by a so-called "silent participation", whereby investors receive remuneration but do not have voting rights. The coupon for the certificates of participation is 8 per cent. The remuneration for the silent participation is 12-month Euribor plus 7.25 per cent. Germany notified the measures at a later stage.
At this stage the Commission considers that, whilst the remuneration on both instruments might have been in line with the interest paid on comparable instruments until the beginning of 2008, the market for hybrid instruments had completely dried up by the end of 2008/beginning of 2009. The Commission therefore has doubts that a market investor would have engaged in such an investment at the time. Under EU state aid rules, interventions by public authorities in companies carrying out economic activities can be considered free of aid if they are undertaken on terms that a private entity operating under market conditions would have accepted.
The Commission's in-depth investigation needs to determine whether the above-mentioned measures constitute state aid. If it finds that they do, the Commission will need to evaluate how the long-term viability of Sparkasse KölnBonn can be ensured. To this end the Commission has invited Sparkasse KölnBonn to submit a restructuring plan.
The non-confidential version of the decision will be made available under case number NN50/09 in the State Aid Registeron the DG Competitionwebsite 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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