Brussels, 12 February 2009
State aid: Commission approves €1.5 billion capital injection from the Belgian public authorities for Ethias group
Under the EC Treaty rules on state aid, the European Commission has approved a capital injection of €1.5 billion from the Belgian Government for the insurance and banking group Ethias. It concluded that the measure was in line with its communication providing guidance on state aid to overcome the current financial crisis (see IP/08/1495) as well as its rescue and restructuring aid guidelines (see MEMO/04/172). The aid is limited to the minimum required to enable the Ethias group to continue operations and provides for an adequate return on the capital provided by the state authorities. It is therefore compatible with Article 87(3)(b) of the EC Treaty, which permits aid intended to remedy a serious disturbance in the economy of a Member State.
EU Competition Commissioner Neelie Kroes said: "This capital injection will enable the Ethias group to weather the financial crisis. The group can now draw up a restructuring plan to ensure its long-term viability. The Commission has once again demonstrated that it can take effective decisions on measures aimed at stabilising the situation of enterprises affected by the crisis once it is in possession of full information and sufficient commitments."
The Belgian authorities informed the Commission on 20 October 2008 of the proposed capital injection of €1.5 billion for the Ethias group. The additional information required by the Commission to assess the aid was provided in January and February 2009.
Thanks to this measure, the group's solvency margin coverage has been restored to a level acceptable for the Belgian regulator. Owing to the current financial crisis, the Ethias group is experiencing a sharp fall in the value of its financial assets and the withdrawal of a large number of investors. This has resulted in a drop in the solvency margin coverage and in urgent state intervention.
In return for this capital injection, the state authorities will acquire a stake in the Ethias group that will give it a preferential claim on future profits. An appropriate level has been set for the return on capital to be paid by Ethias to the state authorities if it returns to profit. Investors have priority in receiving dividends up to 10% of their investment, a level which is furthermore guaranteed by other conditions in the subscription agreement.
The aid is authorised for a maximum of six months. To obtain an extension of the derogation, the Belgian Government has agreed to submit to the Commission by 20 April 2009 a restructuring plan aimed at restoring the long-term viability of the Ethias group and avoiding any undue distortion of competition.
The non-confidential version of the decision will be made available under case number NN 57/2008 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 online newsletter State aid Weekly e-News.