Brussels, 15 January 2003
Mario Monti welcomes the abolition of State guarantees for German public sector banks
At the end of the transitional period, state guarantees for regional German public sector banks and public savings banks will be definitively abolished," declared Mr Monti, the Commissioner with special responsibility for competition. The German authorities have redrafted the legal provisions governing the status of public sector banks and savings banks and met the time limit (end 2002) for doing so - pursuant to the agreements concluded in Brussels in July 2001 and February 2002. As a result, the "Anstaltslast" and "Gewährträgerhaftung" guarantees will also no longer apply in German law. This opens the way for fair competition in the German and European banking sector.
The now effective adoption of all the amending laws concerning public sector banks and savings banks were preceded by intensive discussions in the summer and autumn of 2002. Mr Monti welcomed the full co-operation of the Federal Government and the various federal authorities, which had already forwarded drafts of the new provisions at an earlier stage. Close co-operation in the run-up period has significantly speeded up the adoption of the legislation.
"The new legal situation at last creates fair competition on the internal market for financial services. Hitherto, state guarantees enabled public sector banks to expand their banking business at the expense of competitors, since State guarantees reduce refinancing costs on the capital markets, thus giving the banks better conditions when they raise funds for new business opportunities. The competitiveness of the German and the European economy will benefit from the abolition."
"There will be no sudden break," Mario Monti emphasised, "since we have agreed transitional provisions. The new legal situation will benefit German taxpayers, German and foreign banks and also the German public sector banks themselves, since in the long term it cannot be in their interests to shield themselves from competition."
The "Anstaltslast" and the "Gewährträgerhaftung" are very important, for four reasons," declared Mr Monti. It shows that the Commission is acting against all forms of state aid - direct and indirect (e.g. state guarantees) - that are incompatible with EU law, that the Commission is carefully monitoring developments in European banking, that it is resolutely fulfilling its duty as guardian of the Treaty vis-à-vis all Member States (large and small), and that it is perfectly possible to comply with the state aid rules without questioning the public-law nature of undertakings."
Mario Monti emphasised it is particularly important that the Commission monitor closely the implementation of Commission decisions into national law: "In future the Commission will lend even greater force to the monitoring of the transposal of decisions into national law than it has hitherto. Even if, in the Member States, there is a willingness among most of the participants to tranpose decisions properly - as is the case with the public sector banks and the savings banks - there are often technical mistakes in the transposal or differences of opinion on certain points. It is important to identify and correct such mistakes at an earlier stage."
After the start of the negotiations in February 2000, the European Commission proposed "appropriate measures" to the German Government on 8 May 2001 in order to make the Anstaltslast and Gewährträgerhaftung guarantee system compatible with the state aid rules in the EC Treaty.
In July 2001 the German authorities accepted the proposed measures without reservation, after Mr Monti and Mr Koch-Weser, State Secretary in the German Ministry of Finance, had reached agreement on the basic principles of a solution, the procedure, the timetable and the transitional arrangements. Further discussions were needed however, to clear up important aspects, in particular the application of the aid rules to state-owned special purpose banks (Föderbanken) and the grandfathering of the existing State guarantees.
After the discussions had been successfully concluded, the Commission on 27 March 2002 changed the appropriate measures it had proposed in order fully to reflect the measures taken by Germany as had been agreed. Germany, for its part, formally accepted the new Commission decision on 11 April 2002. All the German laws on the Landesbanks and the savings banks were properly adapted by the end of 2002.
The most important changes to the guarantee system
The "Gewährträgerhaftung" will be abolished for all regional public sector banks (Landesbanken) and the public sector savings banks.
The Anstaltslast will be replaced by a normal ownership structure between the owner and the public financial institution concerned.
Liabilities outstanding on 18 July 2001, the day the Commission's recommendation of 8 May 2001 was accepted, will continue to be covered by the Gewährträgerhaftung until they expire. A transitional period will apply until 18 July 2005, during which the Anstaltslast and the Gewährträgerhaftung may be retained in their current form. At the end of this transitional period, every liability existing at that date and entered into before 18 July 2001 will continue to be covered by the Gewährträgerhaftung, on condition that they do not extend beyond 31 December 2015.
"Anstaltslast" and "Gewährträgerhaftung"
The "Anstaltslast" can be described as the obligation on the owner to maintain the institution concerned. This means that the public owner (e.g. the Federal Government, the Länder or the municipalities) is obliged to protect the economic basis of the institution and maintain its viability throughout its lifetime. The "Anstaltslast" does not confer rights on creditors.
By contrast, the "Gewährträgerhaftung" gives creditors a direct claim on the guarantor (Gewährträger), and is therefore an obligatory liability. The guarantor must honour all the bank's liabilities that cannot be met from the bank's assets.
Neither form of guarantee is limited in terms of time or amount. Credit institutions do not need to pay a charge for them.