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Brussels, 27th November 2008

State aid: Commission approves Dutch emergency recapitalisation of Aegon

The European Commission has approved, under EC Treaty state aid rules, an emergency intervention in the form of a recapitalisation, that the Dutch authorities intend to grant to Aegon N.V., the holding company of the Dutch insurance and pension group Aegon. The Commission found the measure to be in line with its Guidance Communication on state aid to overcome the current financial crisis (see IP/08/1495). The measure constitutes an adequate means to remedy a serious disturbance in the Dutch economy while avoiding undue distortions of competition and is therefore compatible with Article 87.3.b. of the EC Treaty. In particular, the measure is limited in time and scope, requires an adequate remuneration and provides safeguards to minimise distortions of competition.

Competition Commissioner Neelie Kroes said: "The capital injection is necessary to maintain the markets' confidence in Aegon and to ensure the refinancing of this company. The intervention is limited in time and its distortive effect is minimised through appropriate safeguards."

On 12 November 2008, the Dutch authorities notified their plans to recapitalise Aegon N.V. with €3 billion through a special type of securities. The securities are to be issued on 1 December 2008.

In the current financial climate, even fundamentally sound institutions like Aegon may experience difficulties and need to reassure financial markets about their financial stability.

The securities to be issued would qualify as capital under the applicable solvency regulations and produce an annual coupon equal to the higher of:

  • €0.34 per security, non cumulative, payable annually in arrears
  • 110% of the dividend paid on the ordinary shares in 2009
  • 120% of the dividend paid on the ordinary shares in 2010
  • 125% of the dividend paid on the ordinary shares from 2011 onwards

The coupon would only be paid if a dividend is paid on the ordinary shares. If Aegon decides to buy the securities back, the state would receive 150% of the issue price. This payment structure is similar to the one used in the recapitalisation of ING, approved by the Commission on 13 November 2008 (see IP/08/1699).The Commission concluded that the measure complies with the conditions laid down in its Communication on the application of the state aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis (see IP/08/1495). In particular, the measure meets the following criteria:

  • Necessity: Aegon has an important function in the Dutch financial sector - a loss of confidence in such an institution would have led to a further disturbance of the current situation and harmful spill-over effects to the economy as whole
  • Limited temporal scope: the Dutch authorities have committed to submit a restructuring plan after six months
  • Aid limited to the strict necessary: even with the uncertainty inherent in low-ranking securities, Aegon would pay, taking into account the annual coupon and the repurchase premium, an adequate remuneration to the state, with an expected return in excess of 10%. Adequate safeguards are in place so that the Commission is informed if there are any deviations and, if necessary, can impose additional behavioural constraints
  • Avoidance of undue distortions of competition: the package foresees sufficient behavioural rules to prevent an abuse of the state support.

The non-confidential version of the decision will be made available under the case number N 569/2008 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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