Brussels, 23rd December 2008
The European Commission has approved, under EC Treaty state aid rules, a guarantee package, that Germany intends to grant to NordLB to cover the bank's medium-term refinancing needs in the financial crisis. 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). The guarantee is necessary to avoid a serious disturbance in the German economy. The measure is limited in time and scope, ensures a market- oriented remuneration and foresees sufficient behavioural safeguards to avoid abuses. The guarantee is therefore compatible with Article 87.3.b of the EC Treaty.
Competition Commissioner Neelie Kroes said: "The guarantee programme for NordLB was well designed and complete; therefore, we have been able to approve it very quickly."
On 18 December, Germany notified a guarantee programme for NordLB. The measure is necessary to ensure the bank's refinancing and lending capacity, in the wake of the financial crisis.
The specificity of the programme lies in the fact that the debt for which the guarantee is received is highly collateralised, which goes beyond what has been seen in other cases. The guarantee programme is structured around a special purpose vehicle that supplies financing to NordLB via securities with a maximum maturity of three to five years, backed by a very good, diversified guarantee pool of assets that is constantly reviewed. In so far that the maximum maturity may go up to five years this is justified by the structure of NordLB's liabilities.
The German Länder of Lower Saxony and Saxony-Anhalt would provide state guarantees on the securities and would receive a market-oriented remuneration, in line with the recommendations of the European Central Bank. The Commission found that the programme involved state aid to NordLB. However, the Commission concluded that several provisions ensured the adequacy and proportionality of the measures, in line with the Commission's Guidance Communication on state aid during the financial crisis (see IP/08/1495).
In particular, the period during which securities may be issued under the guarantee programme is limited to six months and the scope of the guarantee is limited to new, short or medium term debt. Finally, Germany made the commitment to report on the implementation of the guarantee every six months and, in case the guarantee is drawn, to submit a restructuring plan for NordLB within six months.
The non-confidential version of the decision will be made available under the case number N655/2008 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.