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State Aid: Commission approves additional aid for IKB

European Commission - IP/09/1235   17/08/2009

Other available languages: FR DE

IP/ 09/1235

Brussels, 17. August 2009

State Aid: Commission approves additional aid for IKB

The European Commission has approved, under EC Treaty state aid rules, guarantees amounting up to EUR 7 billion to the German bank IKB, a bank that received aid in the past (see IP/08/1557 and IP 08/2055 ), in the context of the financial crisis. Additional support has become necessary to protect IKB's liquidity and financial stability in Germany. After obtaining a commitment from Germany to provide a revised restructuring plan within three months, the Commission considers the measure as compatible with Article 87.3.b of the EC Treaty, in line with its Banking communication (see IP/08/1495 ).

Competition Commissioner Neelie Kroes said: "Today's decision on IKB proves again that we contribute to financial stability when applying state aid rules. This aid would grant liquidity to the bank for the coming months, allowing it to sustain lending to the real economy. The German authorities committed themselves to notify a revised restructuring plan, taking into account the changes in the economic climate, which the Commission will assess carefully and swiftly."

IKB is a medium-sized private German bank with a business focus on midsize companies. IKB was the first bank in Germany to receive aid, in 2007 ( see IP/ 08/314 ), to offset the damage caused by bad investments in structured securities in 2007. Restructuring aid to IKB was approved by the Commission on 21 October 2008 (see IP/08/1557 ), and liquidity support was approved on 22 December 2008 (see IP/08/2055 ).

The measure approved today was notified on 6 July 2009 and concerns guarantees for liabilities up to a volume of EUR 7 billion granted by SoFFin, a fund administrating the German support scheme for financial institutions. SoFFin also granted the measure approved on 22 December 2008 (see IP/08/2055 ). This additional support was only allowed in order to counter a threat to financial stability stemming from a potential illiquidity of IKB.

The Commission finds this aid fulfils the general criteria as set out in the Banking communication (see IP/08/1495 ) and the additional, more stringent requirements concerning additional aid in cases where restructuring aid had already been given.

As IKB previously received restructuring aid, it was of particular importance to ensure this additional support is limited to the necessary amount. The Commission analysed IKB's funding needs for the next six months in detail and verified that the aid amount is strictly limited to the required volume, ensuring that the bank has sufficient liquidity buffers to comply with regulatory requirements without being forced to restrain its lending. Additionally, IKB is prohibited from any proprietary trading as a mean to inflate profits with the taxpayer's money.

Given that IKB is facing a significant funding gap, despite the fact that the funding constraints have eased in general, the Commission has doubts regarding IKB's financial capacity to implement the original restructuring plan. For this reason, the Commission has allowed this aid only following Germany's commitment to notify a revised restructuring plan.

The non-confidential version of the decision will be made available under the case number N 400/2009 in the state aid register on the DG Competition website once all the confidentiality problems have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the online newsletter State aid Weekly e-News ).


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