Brussels, 23rd December 2008
The European Commission has approved, under EC Treaty state aid rules, a guarantee, that Germany is granting to IKB to cover the bank's medium-term refinancing needs in the financial crisis. The support aims to ensure that IKB's restructuring is not impeded by insufficient liquidity. The Commission found the measure appropriate to stabilise the bank, in line with its Guidance Communication on state aid in the financial crisis (see IP/08/1495) as well as its rescue and restructuring guidelines (see MEMO/04/172). The guarantee is necessary to avoid a serious disturbance in the German economy and to ensure the continuity of IKB's business activities. As it is limited in time and scope to the minimum necessary to restore the financing, requires an adequate fee level and ensures the economic viability of IKB, it is compatible with Article 87.3.b of the EC Treaty.
Competition Commissioner Neelie Kroes said: "The present decision is an example that our rules are flexible enough to support banks in the financial crisis even if they have previously received restructuring aid."
IKB has asked for a guarantee from the German authorities which they intend to grant in line with the German support scheme for financial institutions (IP/08/1589). However because of its previous restructuring (see IP/08/1557), an individual notification was required. On 16 December 2008, the German authorities notified their plans to support IKB.
Due to the current financial crisis, IKB experienced difficulties concerning its refinancing capabilities. The German authorities therefore intend to grant a guarantee of at most 5 billion euros on IKB's newly issued debt. Germany will receive a market-orientated remuneration in accordance with the recommendations of the European Central Bank.
The measure has been previously approved by SoFFin, the Fund administering the German support scheme for financial institutions which the Commission has already deemed to be in line with its Guidance Communication on state aid during the financial crisis (see IP/08/1495). The Commission acknowledged that the measure comprises state aid and assessed whether the measure, which occurs in the phase of restructuring of IKB, would be in line with the rescue and restructuring guidelines. It raised no objections, however, because the support was motivated by purely external events and is temporary and necessary to help the company to ensure the restoring of viability.
The non-confidential version of the decision will be made available under the case number N 639/2008 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.