State aid: Commission approves recapitalisation of Anglo Irish Bank
European Commission - IP/09/50 14/01/2009
Brussels, 14 January 2009
The European Commission has approved, under EC Treaty state aid rules, an emergency recapitalisation worth €1.5 billion that the Irish authorities intend to grant to Anglo Irish Bank. The Commission found the measure to be in line with its Guidance Communications on state aid during the current financial crisis (see IP/08/1495 and IP/08/1901). The measure constitutes an adequate means to remedy a serious disturbance in the Irish 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 scope, requires an adequate remuneration and provides safeguards to minimise distortions of competition.
On 19th December 2008, the Irish authorities informed the Commission of their intention to recapitalise Anglo Irish Bank with €1.5 billion. On 8th January 2009, the Irish authorities formally notified this measure.
Due to the current financial crisis, even banks that meet the regulatory solvency ratios may experience distress and be required to reinforce their capital. In addition to difficulties caused by the global financial crisis, recent developments with regard to the Anglo Irish Bank's corporate governance increased the need to reassure the financial markets of the bank's stability. Against this background, the Irish authorities decided to inject €1.5 billion into Anglo Irish Bank.
The shares to be issued will qualify as core tier 1 capital and will produce a dividend of 10% payable annually, at the discretion of the bank and in priority to dividends on ordinary shares. Dividends on the shares are payable in cash, or (if the bank is not able to pay in cash) in ordinary shares on the basis of the average daily closing price over the previous 30 trading days. The shares will carry 75% of the voting rights in Anglo Irish Bank. The bank can repurchase the shares at par during maximum five years. After that period, shares can be repurchased at 125% of par. No dividends on ordinary shares are allowed when no dividend on the shares to be issued is paid to the state.
The Commission concluded that the measure complies with the conditions laid down in its Guidance Communications (see IP/08/1495 and IP/08/1901). In particular, the measure meets the following criteria:
The non-confidential version of the decision will be made available under the case number N9/2009 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